Carnegie Mellon University Uniform Guidance Reports Year Ended June 30, 2019 (With Independent Auditors’ Reports Thereon)

Carnegie Mellon University Index June 30, 2019 and 2018

Page(s)

Report of Independent Auditors and Consolidated Financial Statements

Report of Independent Auditors………………………………………………………………………………….1-2

Consolidated Statements of Financial Position………………………………………………………………………………………………………………………..3

Consolidated Statements of Activities…………………………………………………………………….………………………………………………..4-5

Consolidated Statements of Cash Flows………………………………………………………………….…………………………………………………………6

Notes to Consolidated Financial Statements………………………………………………………………………………………………………………….7-39

Schedule of Expenditures of Federal Awards……………………………………………………………...... 40-49

Notes to Schedule of Expenditures of Federal Awards..…………………………………………...………………………………………………………………………50-51

Independent Auditors’ Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards………………………..……………...... 52-53

Independent Auditors’ Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance; and Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance……………………………….………………………..……………...... 54-55

Schedule of Findings and Questioned Costs….……………………………………………………………………………………………………………………..56

KPMG LLP BNY Mellon Center Suite 3400 500 Grant Street Pittsburgh, PA 15219-2598

Independent Auditors’ Report

The Board of Trustees Carnegie Mellon University:

Report on the Consolidated Financial Statements We have audited the accompanying consolidated financial statements of Carnegie Mellon University and its subsidiaries (the University), which comprise the consolidated statement of financial position as of June 30, 2019, the related consolidated statements of activities and cash flows for the year then ended, and the related notes to the consolidated financial statements.

Management’s Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Carnegie Mellon University and its subsidiaries as of June 30, 2019, and the changes in their net assets and their cash flows for the year then ended in accordance with U.S. generally accepted accounting principles.

KPMG LLP is a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Emphasis of Matters As discussed in Note 2 to the consolidated financial statements, in 2019, the University adopted Accounting Standards Update (ASU) No. 2016-14, Not-for-Profit Entities (Topic 958): Presentation of Financial Statements for Not-for-Profit Entities; ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), as amended; ASU No. 2018-08, Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made; and ASU No. 2016-02, Leases (Topic 842), as amended. Our opinion is not modified with respect to these matters.

Other Matter The accompanying consolidated financial statements of the University as of June 30, 2018 and for the year then ended were audited by other auditors whose report thereon dated October 8, 2018, expressed an unmodified opinion on those consolidated financial statements, before the adjustments to adopt ASU No. 2016-14 as described in Note 2 to the 2019 consolidated financial statements. As part of our audit of the 2019 consolidated financial statements, we also audited the adjustments described in Note 2 that were applied to adopt ASU No. 2016-14 retrospectively in the 2018 consolidated financial statements. In our opinion, such adjustments are appropriate and have been properly applied. We were not engaged to audit, review, or apply any procedures to the 2018 consolidated financial statements of the University other than with respect to the adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 2018 consolidated financial statements as a whole.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 25, 2019 on our consideration of the University’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the University’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the University’s internal control over financial reporting and compliance.

Pittsburgh, Pennsylvania October 25, 2019

2 Carnegie Mellon University Consolidated Statements of Financial Position June 30, 2019 and 2018

(dollars in thousands)

2019 2018 Assets Cash and cash equivalents (Note 2)$ 514,765 $ 481,288 Accrued interest and dividends 1,822 1,521 Accounts receivable, net (Note 4) 75,133 61,222 Pledges receivable, net (Note 5) 85,103 104,893 Student loans receivable, net (Note 4) 14,531 17,464 Investments (Note 6 and Note 8) 2,521,844 2,385,406 Assets held in trust by others (Note 8) 10,702 11,066 Prepaid expenses and other assets (Note 2) 47,717 46,983 Right-of-use assets (Note 9) 74,860 - Land, buildings and equipment, net (Note 10) 1,066,641 965,934 Total assets$ 4,413,118 $ 4,075,777 Liabilities Accounts payable and other liabilities (Note 2)$ 220,926 $ 202,082 Deferred revenue (Note 4) 149,834 104,779 Federal student loan funds (Note 2) 15,115 14,828 Present value of split interest agreements payable (Note 2) 14,983 17,028 Right-of-use liabilities (Note 9) 73,174 - Debt obligations (Note 11) 540,818 546,290 Total liabilities$ 1,014,850 $ 885,007 Net assets Without donor restrictions (Note 12)$ 1,564,490 $ 1,464,533 With donor restrictions (Note 12) 1,833,778 1,726,237 Total net assets$ 3,398,268 $ 3,190,770 Total liabilities and net assets$ 4,413,118 $ 4,075,777

The accompanying notes are an integral part of these consolidated financial statements.

3 Carnegie Mellon University Consolidated Statement of Activities Year Ended June 30, 2019

(dollars in thousands)

Without With Donor Restrictions Donor Restrictions Total Revenue and other support Tuition and other educational fees revenue, net of financial aid$ 561,835 $ - $ 561,835 Sponsored projects revenue (Note 4) Software Engineering Institute 141,750 - 141,750 Advanced Robotics for Manufacturing Institute 8,089 - 8,089 Other grants and contracts 274,954 - 274,954 Investment income 62,870 12,412 75,282 Contributions revenue (Note 5) 26,283 116,522 142,805 Auxiliary services revenue 68,205 - 68,205 Other revenue sources 89,811 408 90,219 Net assets released from donor restrictions 73,611 (73,611) - Total revenue and other support$ 1,307,408 $ 55,731 $ 1,363,139 Expenses Salaries$ 685,913 $ - $ 685,913 Benefits 148,056 - 148,056 Other operating expenses 329,005 - 329,005 Depreciation and amortization 72,739 - 72,739 Interest expense 14,837 - 14,837 Total expenses$ 1,250,550 $ - $ 1,250,550 Increase in net assets before nonoperating activities$ 56,858 $ 55,731 $ 112,589 Nonoperating activities Net realized/unrealized gains on investments (Note 6)$ 19,171 $ 93,532 $ 112,703 Other (Note 2) (4,940) (15,762) (20,702) Post-retirement plan changes other than net periodic benefit costs (Note 16) 2,908 - 2,908 Net assets released from restrictions for capital 25,960 (25,960)- Total nonoperating activities$ 43,099 $ 51,810 $ 94,909 Increase in net assets$ 99,957 $ 107,541 $ 207,498 Net assets Beginning of year 1,464,533 1,726,237 3,190,770 End of year$ 1,564,490 $ 1,833,778 $ 3,398,268

The accompanying notes are an integral part of these consolidated financial statements.

4 Carnegie Mellon University Consolidated Statement of Activities Year Ended June 30, 2018

(dollars in thousands)

Without With Donor Restrictions Donor Restrictions Total Revenue and other support Tuition and other educational fees revenue, net of financial aid$ 542,351 $ - $ 542,351 Sponsored projects revenue (Note 4) Software Engineering Institute 142,740 - 142,740 Advanced Robotics for Manufacturing Institute 3,861 - 3,861 Other grants and contracts 247,872 - 247,872 Investment income 55,026 11,286 66,312 Contributions revenue (Note 5) 22,019 132,289 154,308 Auxiliary services revenue 65,325 - 65,325 Other revenue sources (Note 2) 90,086 509 90,595 Net assets released from donor restrictions 72,973 (72,973) - Total revenue and other support$ 1,242,253 $ 71,111 $ 1,313,364 Expenses Salaries$ 653,143 $ - $ 653,143 Benefits 144,883 - 144,883 Other operating expenses 311,208 - 311,208 Depreciation and amortization 67,360 - 67,360 Interest expense 13,370 - 13,370 Total expenses$ 1,189,964 $ - $ 1,189,964 Increase in net assets before nonoperating activities$ 52,289 $ 71,111 $ 123,400 Nonoperating activities Net realized/unrealized gains on investments (Note 6)$ 47,816 $ 126,703 $ 174,519 Other (Note 2) 941 (7,178) (6,237) Post-retirement plan changes other than net periodic benefit costs (Note 16) 4,807 - 4,807 Net assets released from restrictions for capital 84,469 (84,469)- Reclassification (Note 2) (1,000) 1,000 - Total nonoperating activities$ 137,033 $ 36,056 $ 173,089 Increase in net assets$ 189,322 $ 107,167 $ 296,489 Net assets Beginning of year 1,275,211 1,619,070 2,894,281 End of year $ 1,464,533 $ 1,726,237 $ 3,190,770

The accompanying notes are an integral part of these consolidated financial statements.

5

Carnegie Mellon University Consolidated Statements of Cash Flows Years Ended June 30, 2019 and 2018

(dollars in thousands)

2019 2018 Cash flows from operating activities Increase in net assets$ 207,498 $ 296,489 Adjustments to reconcile change in net assets to net cash provided by operating activities: Realized and unrealized (gains) on investments (147,426) (208,354) Depreciation and amortization 72,739 67,360 Amortization of bond premium and bond issuance costs, net (4,411) (2,986) Gifts in kind (530) (415) Loss on asset dispositions 78 727 Cash received from contributions for land, building, and equipment and (75,626) (81,119) endowment Provision for bad debt and other allowances 14,131 10,909 Assets held in trust by others (57) (356) (Increase) decrease in assets: Accrued interest and dividends (301) 250 Accounts receivable, net (12,230) (3,366) Pledges receivable, net 3,978 (7,123) Prepaid expenses and other assets (3,633) (4,110) Increase (decrease) in liabilities: Accounts payable and other liabilities 13,906 (1,189) Deferred revenue 45,055 (1,630) Present value of split interest agreements payable (2,045) 3,516 Net cash provided by operating activities$ 111,126 $ 68,603 Cash flows from investing activities Proceeds from sale and maturity of investments 1,362,454 1,439,359 Purchases of investments (1,351,466) (1,215,792) Purchases of land, buildings and equipment (166,843) (148,195) Federal loan programs 287 43 Disbursements of loans to students (656) (3,442) Repayments of loans from students 3,589 3,196 Net cash (used for) provided by investing activities$ (152,635) $ 75,169 Cash flows from financing activities Proceeds from issuance of indebtedness 120,000 25,394 Repayments of debt obligations (120,633) (26,117) Payment of debt issuance costs (428) (477) Cash received from contributions for land, building, and equipment and endowment 76,047 87,196 Net cash provided by financing activities 74,986 85,996 Net increase in cash and cash equivalents 33,477 229,768 Cash and cash equivalents at beginning of year 481,288 251,520 Cash and cash equivalents at end of year $ 514,765 $ 481,288 Noncash transactions: Non-cash gift in kind 530 415 Changes in accounts payable for land, buildings and equipment 5,813 262 Non-cash stock contributions 77 54 Debt refunding and re-issuance - 52,430

The accompanying notes are an integral part of these consolidated financial statements.

6 Carnegie Mellon University Notes to Consolidated Financial Statements June 30, 2019 and 2018

1. Carnegie Mellon Carnegie Mellon University (“Carnegie Mellon” or “the university”) is a private, not-for- profit educational and research institution. Carnegie Mellon currently enrolls approximately 14,625 students and granted approximately 5,200 bachelor’s, master’s and doctoral degrees in the last academic year. Approximately 78% of undergraduate students are from the United States of America. International students comprise approximately 22% of undergraduate, 65% of master’s, and 57% of Ph.D. students.

2. Summary of Significant Accounting Policies

Basis of Accounting and Reporting The accompanying consolidated financial statements have been prepared on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles (“GAAP”) and include the accounts of Carnegie Mellon as well as the Software Engineering Institute, a federally funded research and development center, and other majority-owned entities. The consolidated entities are Advanced Robotics for Manufacturing Institute (“ARM Institute”), Benjamin Garver Lamme Scholarship Fund, Jack G. Buncher Charitable Fund for Carnegie Mellon, iCarnegie, Inc., and Carnegie Innovations, LLC. All significant inter-entity transactions and balances have been eliminated in consolidation. Carnegie Mellon is a joint sponsor with the University of Pittsburgh in MPC Corporation (“MPC”), a beneficiary of The Dietrich Foundation, and an owner as a tenant in common of the Bellefield Boiler Plant. The activities of MPC, The Dietrich Foundation, and the Bellefield Boiler Plant are not consolidated in Carnegie Mellon’s consolidated financial statements (see Note 17).

In January 2017, the U.S. Department of Defense awarded the ARM Institute, a nonprofit venture led by Carnegie Mellon, a contract to launch an advanced robotics manufacturing institute in Pittsburgh.

Carnegie Mellon’s net assets and revenue, expenses, gains and losses are classified based on the existence or absence of donor imposed restrictions. Accordingly, net assets and changes therein are classified and reported as follows:

Without Donor Restrictions Net assets that are not subject to donor imposed stipulations.

With Donor Restrictions Net assets subject to specific donor imposed or legal stipulations that can be fulfilled by actions of Carnegie Mellon pursuant to those stipulations or that expire by the passage of time. Also included in this category are net assets subject to donor imposed stipulations requiring the assets be maintained in perpetuity. Generally, the donors of these assets permit Carnegie Mellon to use all or part of the income earned on the related investments for general or specific purposes. Other restricted items in this category include annuity and life income gifts where the ultimate purpose of the proceeds is donor restricted.

Revenues are reported as increases in net assets without donor restrictions unless use of the related assets is limited by donor imposed restrictions. Expenses are reported as decreases in net assets without donor restrictions. Gains and losses on investments and other assets or liabilities are reported as increases or decreases in net assets without donor restrictions unless their use is restricted by the donor or by

7 Carnegie Mellon University Notes to Consolidated Financial Statements June 30, 2019 and 2018

law. Expiration or satisfaction of donor restrictions on net assets are reported as net assets released from donor restrictions.

Income and net gains and losses on investments are reported as follows:

 As changes in net assets with donor restrictions, if so restricted by donor; or if the terms of the gift or relevant state law impose restrictions on the use of the income or gains and losses; and

 As changes in net assets without donor restrictions, in all other cases.

Cash Equivalents Cash equivalents include highly liquid investments with original maturities of three months or less when purchased. Cash equivalents are recorded at cost which approximates fair value. These balances are held at the university's custodians, prime brokers, clearing agents, and banking institutions for investment and working capital purposes.

Investments All investments held by Carnegie Mellon are reported at fair value. The fair value of marketable debt and equity securities is based on published current market prices in active securities markets. The fair value of certain investments structured as investment companies is based on the net asset value of such investments and generally is estimated by external investment managers.

As a practical expedient, the university is permitted under the authoritative guidance on fair value measurements to estimate fair value of an investment in an investment company at the measurement date using the reported net asset value (NAV) without further adjustment unless the university expects to sell the investment at a value other than NAV or if the NAV is not calculated in accordance with GAAP. Investments measured under the net asset value practical expedient primarily consist of the university's ownership in alternative investments (principally limited partnership interests in private equity, real estate, natural resources, and hedge funds) and certain investments in commingled funds.

Carnegie Mellon reviews and evaluates the valuation methods and assumptions used by investment managers in determining fair value NAV. Those estimated fair values may differ significantly from values that would result had a ready market for these securities existed. Note 8 - Fair Value provides additional information about inputs used to determine fair value for investments.

Investments received as a gift are reflected as contributions at their fair value at the date of the gift.

Gains and losses, dividends, and interest income from investments are reported in the consolidated statements of activities. Internal and external investment management fees and expenses are netted against investment returns.

Investment securities, in general, are exposed to various risks, such as interest rate, credit and overall market volatility. Due to the level of risk associated with certain

8 Carnegie Mellon University Notes to Consolidated Financial Statements June 30, 2019 and 2018

investment securities, changes could materially affect the amounts reported in the consolidated statements of financial position.

Endowment Investment policy for endowment assets is the responsibility of the Investment Committee of the Board of Trustees. Substantially all endowment assets are managed by outside investment managers and overseen by the university’s Investment Office.

Endowment net assets without donor restrictions include Carnegie Mellon funds, gifts without restrictions from donors, and any accumulated income, gains, and appreciation thereon, which is intended to remain in the endowment for the long-term support of Carnegie Mellon activities, but may be expended under trustee authorization. Also included is interest and dividend income on donor restricted endowment assets where distribution of such income is not subject to a donor restriction.

Endowment net assets with donor restrictions include gifts and any accumulated income, gains, and appreciation thereon which donor restrictions require to be retained in perpetuity to provide a permanent source of support for the university. Also included are accumulated income, gains, and appreciation on endowment assets where distribution/spending of such returns is restricted by the donor. The Trustees of Carnegie Mellon must annually authorize release of endowment gains according to Pennsylvania law. This classification also includes term endowments and endowment gifts whereby the donor permits distributions of the principal amount of the gift and accumulated appreciation.

All endowment funds participate in a Carnegie Mellon investment pool. The investment pool provides income to its respective participants. Such income is used for the specific purpose prescribed by the donor or, if the purpose was not prescribed by the donor, the income is deemed to be without donor restrictions and used for general purposes. New endowment funds or additions to existing funds are assigned shares in the investment pool based upon the per share market value at the end of the previous month. Income distributions from the investment pool are based upon the number of shares held by each participant and the approved spending rate (see Note 7). Income distributions from the investment pool are based upon the “total return concept”. Component amounts of total return not distributed currently are reinvested in the investment pool and are available for distribution from the endowment assets in future years.

Assets Held in Trust by Others Assets held in trust by others include the value of Carnegie Mellon’s beneficial interest in perpetual trusts and irrevocable trusts held by outside trustees. The present value of the perpetual trusts’ estimated future cash receipts, which are measured by the fair value of the assets contributed to the trust, are recognized as assets and contribution revenues at the dates the trusts are established. The assets are adjusted periodically for changes in market values.

Various donors have established irrevocable trusts whereby Carnegie Mellon holds a remainder interest in the trust or is entitled to distributions over the life of the trusts. The present value of the portion of the trusts estimated to be distributable to Carnegie Mellon over the life of the trusts or upon the termination of the trusts are recorded as

9 Carnegie Mellon University Notes to Consolidated Financial Statements June 30, 2019 and 2018

assets and contribution revenues at the dates the trusts are established. The assets are adjusted periodically for changes in market value.

Prepaid Expenses and Other Assets Prepaid expenses represent items such as prepaid insurance, prepaid rentals and other contractual payments made in advance of their use or consumption. Amounts are expensed and amortized over the periods to which the charges relate.

Other assets include deferred compensation plan assets, swap assets and other costs incurred that will result in benefits to future periods.

Right of Use Assets and Liabilities

Operating lease right of use (“ROU”) assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As the university’s leases generally do not provide an implicit rate, the university’s incremental borrowing rate at commencement date is used to determine the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and any initial direct costs incurred. The university’s operating lease ROU assets and operating lease liabilities are calculated including options to extend the lease when it is reasonably certain that the university will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

Land, Buildings and Equipment Land, buildings and equipment are recorded at cost at the date of acquisition or, if acquired by gift, at the estimated fair value as of the date of the gift. Additions to plant assets are capitalized while scheduled maintenance and minor renovations are expensed to operations. Buildings and equipment are reflected net of accumulated depreciation which is calculated on a straight-line basis over the estimated useful lives. Carnegie Mellon capitalizes interest during periods of construction. Carnegie Mellon reviews its land, buildings, equipment and other long-lived assets for impairment whenever events or circumstances indicate that the carrying amount may not be recoverable.

Donated works of art, historical treasures and similar assets have been recognized at their estimated fair value based upon appraisals or similar valuations at the date of acquisition or donation. If purchased, the assets are recognized at cost. The assets are depreciated over 99 years.

Accounts Payable and Other Liabilities Accounts payable and other liabilities include accounts payable, accrued payroll and benefits, swap liabilities, and other accrued expenses.

Federal Student Loan Funds This liability represents Perkins loan funds provided to students by the federal government through Carnegie Mellon. Carnegie Mellon is required to collect the loans on behalf of the federal government. The federal government did not renew the Perkins loan program after September 30, 2017, and did not allow disbursements to

10 Carnegie Mellon University Notes to Consolidated Financial Statements June 30, 2019 and 2018

be made after June 30, 2018. The university has elected to retain the outstanding loans in lieu of assigning the loans to the federal government. The liability will be repaid over the years that loan repayments are received from student borrowers. The amount due from the students is reported in the consolidated statements of financial position as a component of student loans receivable, net.

Present Value of Split Interest Agreements Payable Carnegie Mellon’s split interest agreements with donors consist primarily of gift annuities, unitrusts, lead trusts, charitable remainder annuity trusts and life income agreements. Assets held under these agreements are included in investments. Generally, contribution revenues are recognized at the dates the agreements are established, after recording liabilities for the present value of the estimated future payments to be made to the beneficiaries. The liabilities are adjusted during the term of the trusts for changes in the value of the assets, accretion of the discount and other changes in the estimates of future benefits. The discount rates utilized for split interest agreements range from 1.2% to 6.0%. Distributions from the trusts are recorded in accordance with the donor’s stipulations as contributions and the carrying value of the assets are adjusted for changes in the fair value of the trust assets.

Operating Activities Carnegie Mellon’s measure of operations without donor restrictions includes revenue from tuition, sponsored projects, investment return distributed according to Carnegie Mellon’s spending policy, contributions without donor restrictions, revenues from auxiliary services and other sources, and net assets released from donor restrictions. Operating expenses are reported by natural classification.

Revenue Recognition For the year ended June 30, 2018, the university recognized revenue when persuasive evidence of an arrangement existed, the fees were fixed or determinable, the revenue was earned and collectability was assured.

11 Carnegie Mellon University Notes to Consolidated Financial Statements June 30, 2019 and 2018

Beginning with the adoption of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”) on July 1, 2018, revenue is recognized when control of the promised goods or services is transferred to customers in an amount that reflects the consideration the university expects to be entitled to receive in exchange for those goods and services.

Contributions Revenue Contributions include gifts, grants and unconditional promises to give that are recognized as revenue, at fair value, in the period such commitments are received. Conditional promises to give may be subject to both a barrier to entitlement and a right of return of unused funds. Such contributions are recognized as revenue when the barrier is satisfied. Unconditional promises to give to be received in future years are discounted, as of the date of the gift, at a rate commensurate with the pledge payment schedule. A discount rate commensurate with fair value is used. An allowance is estimated for uncollectible contributions based upon historical patterns and any known uncollectible accounts or accounts in arrears.

Capital Contributions Donors’ contributions to fund construction projects are classified as net assets with donor restrictions and are released from donor restriction through nonoperating activities when the facility is placed in service. $26.0 million and $84.5 million of capital contributions were released from donor restriction during fiscal years 2019 and 2018, respectively, and were reclassified from net assets with donor restrictions to net assets without donor restrictions through nonoperating activities.

Nonoperating Activities Items presented in the consolidated statements of activities as “Nonoperating activities”-Other include unrealized gains and losses and interest expense related to interest rate swap agreements, post-retirement plan changes other than net periodic benefit costs, losses from adjustments of pledges receivable with donor restrictions and other gains and losses.

Income Taxes Carnegie Mellon is a nonprofit organization as described in Section 501(c)(3) of the Internal Revenue Code (the “Code”) and is generally exempt from income taxes on related income pursuant to Section 501(a) of the Code.

The university accounts for uncertainties in income taxes in accordance with authoritative guidance, which prescribes a recognition threshold of more-likely-than- not to be sustained upon examination by the appropriate taxing authority. Measurement of the tax uncertainty occurs if the recognition threshold has been met. Management determined there were no tax uncertainties that met the recognition threshold at June 30, 2019 and 2018.

The university’s federal Exempt Organization Business Income Tax Returns remain subject to examination by the Internal Revenue Service for the years subsequent to June 30, 2015.

The university’s policy is to recognize interest related to unrecognized tax benefits in interest expense and penalties in operating expenses.

12 Carnegie Mellon University Notes to Consolidated Financial Statements June 30, 2019 and 2018

Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported consolidated financial statements and related accompanying footnote disclosures. Actual results could differ from those estimates and these differences could be material.

Adoption of New Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers. This standard implements a single framework for recognition of all revenue earned from customers. This framework ensures that entities appropriately reflect the consideration to which they expect to be entitled in exchange for goods and services by recognizing revenue as performance obligations are satisfied. Qualitative and quantitative disclosures are required to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The university adopted this standard on July 1, 2018. See Note 4 for additional information.

In June 2018, the FASB issued ASU 2018-08, Not-for-Profit Entities (Topic 958): Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made. ASU 2018-08 addresses current guidance about whether a transfer of assets (or the reduction settlement, or cancellation of liabilities) is a contribution or an exchange transaction for purposes of revenue recognition. The new guidance is to be applied on a modified prospective basis to all agreements that are not fully recognized as of the effective date. The university adopted this standard on July 1, 2018, the result of which did not have a material impact on its consolidated financial statements. See Note 5 for additional information.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The main difference between previous GAAP and Topic 842 is the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. The guidance aims to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the Consolidated Statement of Financial Position and disclosing key information about leasing arrangements. The standard is effective for fiscal years beginning after December 15, 2018 and should be applied on a modified retrospective basis in the year it is first applied. The university early adopted this standard on July 1, 2018 using the effective method. Upon adoption, the university recorded ROU assets and liabilities related to real estate rentals. No change to beginning net assets was necessary. See Note 9 for additional information.

For the year ended June 30, 2019, the university adopted ASU No. 2016-14 Not-for- Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities. This update addresses the complexity and understandability of net asset classification, deficiencies in information about liquidity and availability of resources, and the lack of consistency in the type of information provided about expenses and investment return between not-for-profit entities. The changes required by the update have been applied retrospectively to all periods presented. A key change required by ASU 2016-14 is the net asset classes used in these consolidated financial statements. Amounts totaling $1.5 billion previously reported as unrestricted net assets are now

13 Carnegie Mellon University Notes to Consolidated Financial Statements June 30, 2019 and 2018

reported as net assets without donor restrictions and amounts totaling $1.7 billion previously reported as temporarily restricted net assets ($0.8 billion) and permanently restricted net assets ($0.9 billion) are now reported as net assets with donor restrictions.

3. Financial Assets and Liquidity Resources

The university continuously monitors liquidity needed to meet its operating activities while prudently investing its available capital. Possible sources of liquidity include cash and cash equivalents, short-term investments, marketable debt and equity securities, a $50.0 million line of credit and a $70.0 million commercial paper program (see Note 11). The university also anticipates converting certain receivables to cash within the next twelve months. As of June 30, 2019 and 2018, financial assets available within one year for general expenditure are as follows (dollars in thousands):

2019 2018

Cash and cash equivalents$ 514,765 $ 481,288 Accounts receivable 75,133 61,222 Pledge receivables donor restricted for operations 9,894 10,361 Short-term working capital investments 113,416 117,894 Subsequent year's approved endowment distributions 91,367 85,883 Subsequent year's approved long -term working capital distributions 7,896 6,510 Total financial assets available within one year$ 812,471 $ 763,158

For purposes of analyzing resources available for general expenditures over a 12- month period, the university considers all expenditures related to its ongoing activities of teaching and research, as well as the conduct of services undertaken to support those activities, to be general expenditures. This includes short-term working capital investments available for construction and plant activity. Long-term working capital investments are included within the university's long-term investments pool. While the university does not intend to spend from these long-term working capital investments other than the amounts appropriated for general expenditure as indicated above, the long-term working capital investments could be made available if necessary. However, the long-term investments pool contains investments with lock-up provisions that reduce the total investments that could be made available (see Notes 6 and 8).

4. Revenue from Contracts with Customers and Accounts Receivable

Effective July 1, 2018, the university adopted ASC 606. Results for the fiscal year ended June 30, 2019 are presented under ASC 606. The university elected to use the modified retrospective method applied to active contracts as of July 1, 2018. Therefore, the comparative information for the fiscal year ended June 30, 2018 has not been restated and continues to be reported under the accounting standards in effect in that reporting period.

Performance Obligations and Revenue Recognition

Tuition Revenue: The university’s performance obligation is to provide educational services in the form of instruction during the academic terms. As these services are provided, deferred revenue is reduced and revenue is recognized. Revenue related to

14 Carnegie Mellon University Notes to Consolidated Financial Statements June 30, 2019 and 2018

student services crossing fiscal years is recognized on a pro-rata basis based upon the number of instruction days in each period. Tuition, at published prices, from undergraduate students was $363.5 million and $351.1 million for the year ended June 30, 2019 and 2018, respectively. Tuition, at published prices, from graduate students was $327.9 million and $316.2 million for the year ended June 30, 2019 and 2018, respectively. Other education related revenue was $35.6 million and $32.8 million for the year ended June 30, 2019 and 2018, respectively.

Sponsored Projects Revenue: The university’s performance obligation is to complete the research or other sponsored activity over the contract term. The university receives sponsored program funding from various governmental and corporate sources. The funding may represent a reciprocal transaction in exchange for an equivalent benefit in return, or it may be a nonreciprocal transaction in which the resources provided are for the benefit of the university, the funding organization’s mission, or the public at large.

Revenues from exchange transactions are recognized as performance obligations are satisfied, which in most cases are as related costs are incurred. Revenue from non- exchange transactions (contributions) may be subject to conditions, in the form of both a barrier to entitlement and a refund of amounts paid (or a release from obligation to make future payments). Revenues from conditional non-exchange transactions are recognized when the barrier is satisfied. In addition, the university has elected the simultaneous release option for conditional contributions that are also subject to purpose restrictions. Under this option, net assets without donor restrictions will include the donor-restricted contributions for which the purpose restrictions are met in the same reporting period as the revenue is recognized.

Auxiliary Services Revenue: Carnegie Mellon’s auxiliaries exist primarily to furnish goods and services to students, faculty and staff. Managed as essentially self- supporting activities, Carnegie Mellon’s auxiliaries consist principally of housing and dining services, telecommunications, parking, printing and publications, retail and other external services. The performance obligation is to provide the service. Revenue is recognized as the services are provided.

Other revenue sources: Other revenue is comprised of funding received for Carnegie Mellon’s international locations, royalty income, licensing revenue, affiliate/membership revenue and other miscellaneous revenues. Other revenue is recognized over the period in which the applicable performance obligation is satisfied.

The university has elected the practical expedient in ASC 606-10-50-14 to not disclose the information about remaining performance obligations that have original expected durations of one year or less.

Transaction Price

Revenue, or transaction price, is measured as the amount of consideration expected to be received in exchange for transferring goods or services.

Students may receive discounts or scholarships on tuition which give rise to variable consideration. Therefore, the transaction price for tuition revenue is reduced directly by these discounts or scholarships from the amount of the standard rates charged.

15 Carnegie Mellon University Notes to Consolidated Financial Statements June 30, 2019 and 2018

These discounts are considered financial aid and were $165.2 million and $157.8 million for the year ended June 30, 2019 and 2018, respectively. Upon withdrawal, a student may be eligible to receive a refund, or a partial refund, the amount of which is dependent on the timing of the withdrawal during the academic term. The amount of refunds paid is not a significant portion of the university’s tuition revenue.

For sponsored projects revenue, the transaction price is based upon a signed contract for direct costs along with indirect cost recovery. While the scope and price on certain contracts may be modified over their life, the transaction price is based on current rights and obligations under the contract and does not include potential modifications until they are agreed upon with the customer. When applicable, a cumulative adjustment or separate recognition for the additional scope and price may result. Indirect sponsored projects revenue is recorded at rates established in advance by Carnegie Mellon through negotiations with the United States government and other sponsors based upon direct costs incurred. The actual federal indirect cost rate is audited by the Defense Contracts Audit Agency (DCAA) and a final fixed rate agreement is signed by the United States government and Carnegie Mellon. The variance between the negotiated fixed and the final audited indirect cost rate results in a carryforward (over or under recovery) that is included in the calculation of negotiated fixed rates in future years.

The transaction price for auxiliary services revenue is based upon published prices and rates. Other sources revenue has transaction prices based upon contractual terms.

Contract Balances

Students are billed prior to the start of each academic term based upon the agreements they signed and payment is due prior to the start of the term. Student receivables are not collateralized; however, credit risk is minimized as a result of the diverse nature of the university's student base. The university establishes an allowance for doubtful accounts based on historical trends and other information.

Sponsored projects revenue is invoiced per the terms of the contractual agreement. Amounts received from sponsors under agreements that require the exchange of assets, rights or other privileges between Carnegie Mellon and the sponsor are recorded as deferred revenue until the contract terms are fulfilled.

Other sources revenue is invoiced per the terms of contractual agreements.

Accounts receivable at June 30, 2019 and 2018, consist of the following (dollars in thousands):

16 Carnegie Mellon University Notes to Consolidated Financial Statements June 30, 2019 and 2018

2019 2018 Sponsored project accounts receivable Software Engineering Institute$ 389 $ 267 Other contracts and conditional grants 53,881 42,708 Total sponsored projects accounts receivable$ 54,270 $ 42,975 Student accounts 4,317 4,653 Other 18,333 18,654 Total student accounts and other$ 22,650 $ 23,307 Allowance for doubtful accounts (1,787) (5,060) Net accounts receivable$ 75,133 $ 61,222

Other accounts receivable relates primarily to Carnegie Mellon’s international programs, affiliate and membership agreements, license agreements and other miscellaneous revenue sources.

Deferred revenue at June 30, 2019 and 2018 consists of the following (dollars in thousands):

2019 2018 Sponsored projects deferred revenue Software Engineering Institute$ 10,153 $ 9,046 ARM Institute 8,222 - Other contracts and conditional grants 53,611 38,692 Total sponsored projects deferred revenue$ 71,986 $ 47,738 Student accounts deferred revenue 18,474 19,154 Other 59,374 37,887 Total deferred revenue$ 149,834 $ 104,779

Federal and other sponsored grants and contracts may include fiscal funding clauses or be subject to annual appropriation. These sponsored research agreements typically span less than five years. The university estimates that its conditional awards outstanding as of June 30, 2019 approximate historical annual sponsored program activity.

Student Loans Receivable

Net student loans receivable of approximately $14.5 million and $17.5 million, as of June 30, 2019 and 2018, respectively, primarily represent student loans made under the Perkins federal loan program. These loans are reported net of an allowance for doubtful accounts of approximately $0.5 million as of June 30, 2019 and 2018.

17 Carnegie Mellon University Notes to Consolidated Financial Statements June 30, 2019 and 2018

5. Contributions Revenue and Pledges Receivable

Contributions revenue includes gifts, grants, and unconditional promises to give and is recorded in the appropriate net asset category based upon donor stipulations.

Conditional promises to give, which depend on the satisfaction of identified barriers such as matching gifts from other donors, are recognized as contributions revenue when the conditions are substantially met. Carnegie Mellon had approximately $36.3 million and $25.5 million as of June 30, 2019 and 2018 of conditional contributions outstanding related to capital projects. In addition, the university had approximately $7.0 million and $5.0 million, related to conditional contributions as of June 30, 2019 and 2018, respectively, recorded as deferred revenue in the consolidated statements of financial position. These amounts were not recognized as contributions revenue during the respective fiscal year as the barriers had not been met.

Pledges receivable as of June 30, 2019 and 2018 are due as follows (dollars in thousands):

2019 2018

In one year or less$ 37,461 $ 40,470 Between one year and five years 56,385 54,922 More than five years 17,529 25,092 Pledges receivable, gross$ 111,375 $ 120,484

Unamortized discount (12,309) (11,220) Allowance for unfulfilled pledges (13,963) (4,371)

Pledges receivable, net of discount and allowance $ 85,103 $ 104,893

18 Carnegie Mellon University Notes to Consolidated Financial Statements June 30, 2019 and 2018

6. Investments

Investments by major category at June 30, 2019 and 2018 are as follows (dollars in thousands):

2019 2018 Cash equivalents$ 56,225 $ 66,318 Short-term securities with maturities less than one year 17,357 47,516 Fixed income securities 291,375 252,438 Short-term fixed income securities 64,005 39,638 Equity securities 923,592 904,830 Alternative investment partnerships 1,169,290 1,074,666 Total investments$ 2,521,844 $ 2,385,406

Investments are held for the following purposes (dollars in thousands):

2019 2018 Endowment$ 1,983,575 $ 1,872,191 Reserves for working capital and plant - short-term 113,416 117,894 Reserves for working capital and plant - long-term 362,852 333,286 Other 62,001 62,035 Total investments$ 2,521,844 $ 2,385,406

Fixed income securities are United States Treasury and Agency obligations, investment grade corporate debt, short-term commercial paper, and asset backed securities. Equity securities at June 30, 2019 included approximately 49.5% domestic equities and 50.5% international and emerging market equities. Equity securities at June 30, 2018 included approximately 51.8% domestic equities and 48.2% international and emerging market equities. Alternative investment partnerships are largely investments in buyout, venture capital, real estate, natural resources and hedge funds.

The allocation to each major category in the previous table represents the actual allocation of the short-term and long-term reserves, and other miscellaneous investments on a combined basis. Actual allocations on a combined basis should not be interpreted as an investment allocation policy for a particular investment pool.

Operating investment income as reported in the consolidated statements of activities includes dividends and interest earned on funds without donor restrictions as well as accumulated gains without donor restrictions utilized for current operations in the

19 Carnegie Mellon University Notes to Consolidated Financial Statements June 30, 2019 and 2018

amounts of $34.7 million and $33.8 million for the years ended June 30, 2019 and 2018, respectively. The accumulated gains are reclassified from net realized gains to investment income.

Certain of Carnegie Mellon’s outside investment managers are authorized and do purchase and sell derivative instruments in order to create, increase, decrease, or hedge exposures to market position, including to manage risk due to interest rate and foreign currency fluctuations.

Carnegie Mellon’s long-term investments comprise U.S. domestic and international portfolios. Carnegie Mellon does not hedge international portfolios with respect to foreign currencies. Investment managers of these international portfolios have the discretion to, and certain do, manage foreign currencies through foreign exchange contracts to protect the portfolios from potential foreign currency losses and to benefit from potential gains. Carnegie Mellon’s investment managers understand that they are assuming active management risks to the extent that they assume foreign currency exposures that differ from the foreign currency exposures in their relevant market benchmarks.

Gains or losses from derivative instruments are reported as realized and unrealized gains or losses in the consolidated statements of activities. The fair value of all derivative instruments is included in the fair value of the investments

Under the terms of certain limited partnership agreements, Carnegie Mellon is obligated to periodically advance additional funding for venture capital, buyout, real estate, and natural resources fund investments. At June 30, 2019 and 2018, Carnegie Mellon had unfunded commitments of approximately $646.2 million and $501.8 million, respectively, for which capital calls had not been exercised. Such commitments generally have fixed expiration dates or other termination clauses. Carnegie Mellon maintains sufficient liquidity in its investment portfolio to cover such calls.

Alternative investment partnerships are less liquid than Carnegie Mellon’s other investments. The following tables summarize these investments (by strategy type at June 30, 2019 and 2018 (dollars in thousands):

20 Carnegie Mellon University Notes to Consolidated Financial Statements June 30, 2019 and 2018

2019 2018 Unfunded Number Fair Number Fair Commitments Redemption Redemption of Funds Value of Funds Value at June 30, 2019 Frequency (a) Notice Period (a) Semi-monthly 2-30 days Commingled Funds 6$ 311,029 7$ 343,424 and Monthly Hedge funds 18 209,358 19 255,139 Semi-annually 30-90 days Natural resources 22 131,340 23 135,807$ 36,168 and Annually Private equity (buyout) funds 57 156,682 54 146,357 157,510 Real estate 23 96,424 23 88,133 140,987 Venture capital 150 548,319 135 424,123 265,020 Other 15 27,168 14 25,107 46,531 Total 291$ 1,480,320 275$ 1,418,090 $ 646,216

(a) Commingled funds and hedge fund investments held by the university may be subject to restrictions related to the initial investment that limit the university’s ability to redeem capital from such investments during a specified period of time subsequent to the university’s investment of capital in such funds, typically known as a lock-up period. Capital available for redemption after the lock-up period has expired may also be subject to limits which restrict the available redemption period to semi-monthly, monthly, quarterly, semi-annually, annually, or triennially and require 2 – 120 days prior written notice, potentially limiting the university’s ability to respond quickly to changes in market conditions. All commingled funds have passed the lock-up period as of June 30, 2019.

Natural resources, private equity, real estate, venture capital, and other alternative investments cannot be redeemed upon request. Instead, the nature of these investments is that distributions are received through the liquidation of the underlying assets of the fund. It is estimated that the underlying assets of these funds would be liquidated over approximately four to eight years.

21 Carnegie Mellon University Notes to Consolidated Financial Statements June 30, 2019 and 2018

7. Endowments The following tables outline the endowment net asset composition by type of fund as of June 30, 2019 and 2018 (dollars in thousands): 2019 Without With Donor Restrictions Donor Restrictions Total

Donor-restricted endowment funds$ - $ 1,563,803 $ 1,563,803 Board-designated funds 438,497 - 438,497 Total funds$ 438,497 $ 1,563,803 $ 2,002,300

2018 Without With Donor Restrictions Donor Restrictions Total Donor-restricted endowment funds$ - $ 1,447,180 $ 1,447,180 Board-designated funds 439,652 - 439,652 Total funds$ 439,652 $ 1,447,180 $ 1,886,832

The following tables provide a summary of the changes in value of the endowment net assets excluding endowment pledges for the years ended June 30, 2019 and 2018 (dollars in thousands):

2019 Without With Donor Restrictions Donor Restrictions Total Endowment net assets, beginning of year $ 439,652 $ 1,447,180 $ 1,886,832 Gifts and other additions$ 112 $ 58,506 $ 58,618

Investment income Interest and dividends$ 9,558 $ 11,084 $ 20,642 Net realized gains on sale of securities 31,558 103,878 135,436 Net unrealized losses (2,584) (10,693) (13,277) Total investment income$ 38,532 $ 104,269 $ 142,801 Income distributed Cash and accrued interest and dividends$ (9,558) $ (11,084) $ (20,642) Accumulated realized investment gains (30,241) (35,068) (65,309) Total income distributed$ (39,799) $ (46,152) $ (85,951) Endowment net assets, end of year $ 438,497 $ 1,563,803 $ 2,002,300 (1)

(1)Includes $18.7 million of endowment gifts and other transfers pending investment and other accruals.

22 Carnegie Mellon University Notes to Consolidated Financial Statements June 30, 2019 and 2018

2018 Without With Donor Restrictions Donor Restrictions Total Endowment net assets, beginning of year $ 427,230 $ 1,292,449 $ 1,719,679 Gifts and other additions$ 28 $ 62,301 $ 62,329

Investment income Interest and dividends$ 8,957 $ 10,048 $ 19,005 Net realized gains on sale of securities 18,196 55,046 73,242 Net unrealized gains 23,434 70,180 93,614 Total investment income$ 50,587 $ 135,274 $ 185,861 Income distributed Cash and accrued interest and dividends$ (8,957) $ (10,048) $ (19,005) Accumulated realized investment gains (29,236) (32,796) (62,032) Total income distributed$ (38,193) $ (42,844) $ (81,037) Endowment net assets, end of year $ 439,652 $ 1,447,180 $ 1,886,832 (1)

(1)Includes $14.6 million of endowment gifts and other transfers pending investment and other accruals.

Unless the donor specifies that only a certain amount of the endowment may be spent, Pennsylvania Act 141 allows organizations to choose a total return spending policy strategy, whereby the board of trustees may annually elect to spend between 2.0% and 7.0% of the fair market value of the endowment. Carnegie Mellon maintains a total return spending policy. Endowment income distributions can consist of dividend and interest income and a withdrawal of accumulated capital gains, when necessary. The main objective of the total return spending policy is to separate spending policy from investment policy. This approach permits asset allocation decisions to be made independently of the need for current income. Carnegie Mellon targets a diversified asset allocation to achieve its long-term objectives with prudent risk constraints. The endowment spending rate is determined annually pursuant to a smoothing formula whereby an approved spending rate percentage is applied to the trailing 36 month average of endowment market values at December 31. For fiscal years 2019 and 2018, the approved spending rate was set at 5.0%. As a result of the spending rate formula, the effective spending rate (defined as the endowment draw totals for the fiscal years ended 2019 and 2018 divided by the June 30 endowment market values for the those fiscal years) was 4.3% for June 30, 2019 and June 30, 2018.

8. Fair Value ASC Topic 820, Fair Value Measurement, establishes a hierarchy to prioritize valuation inputs based on the extent to which the inputs are observable in the marketplace. Observable inputs reflect market data obtained from sources independent of the reporting entity and unobservable inputs reflect the entity’s own assumptions about how market participants would value an asset or liability based on the best information available.

23 Carnegie Mellon University Notes to Consolidated Financial Statements June 30, 2019 and 2018

The following is a description of the university's valuation methodologies for assets and liabilities measured at fair value: Level 1 Based upon quoted prices in active markets that the university has the ability to access for identical assets and liabilities. Market price data is generally obtained from exchange or dealer markets. The university does not adjust the quoted price for such assets and liabilities, which include active listed equities, mutual funds, government supported obligations and cash equivalents. Level 2 Based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active or assets subject to transfer restrictions. Inputs are obtained from various sources including market participants, dealers, and brokers. Level 3 Based on valuation techniques that use significant inputs that are unobservable as they trade infrequently or not at all.

24 Carnegie Mellon University Notes to Consolidated Financial Statements June 30, 2019 and 2018

The following tables present the financial instruments carried at fair value for fiscal years 2019 and 2018 by caption in the consolidated statements of financial position by the valuation hierarchy defined above (dollars in thousands). 2019 Quoted Significant Prices in Other Significant Active Observable Unobservable Markets Inputs Inputs Total Fair (Level 1) (Level 2) (Level 3) Value Assets Deferred compensation plan assets $ 12,561 $ 5,859 $ 2,460 $ 20,880

Investments Cash equivalents (a) $ 33,543 $ 22,682 $ - $ 56,225 Other-short term investments with maturity of less than 1 year (b) - 17,357 - 17,357 Equity investments U.S. - equity funds and common stocks (a) 375,846 - 6,249 382,095 Mutual funds - international developed 49,650 - - 49,650 Mutual funds - international emerging 180,817 - - 180,817 Short-term fixed income - 64,005 - 64,005 Fixed income funds & securities (a) 291,375 - - 291,375 $ 931,231 $ 104,044 $ 6,249 $ 1,041,524 Investments measured under the NAV practical expedient (c) 1,480,320 Total investments $ 2,521,844

Beneficial interests held by third party $ - $ - $ 2,265 $ 2,265 Perpetual trusts held by third party - - 8,437 8,437 Total assets held in trust by others - - 10,702 10,702 Interest rate swap receivable - 1,293 - 1,293 Total assets at fair value $ 943,792 $ 111,196 $ 19,411 $ 2,554,719

Liabilities Interest rate swaps payable - 29,478 - 29,478 Total liabilities at fair value $ - $ 29,478 $ - $ 29,478

There were no significant transfers between Level 1 and Level 2 for the fiscal year ended 2019 (a) Presentation as a single class is appropriate based on the nature and risks of these investments.

(b) Other short term investments with maturity of less than 1 year include highly liquid commercial paper. This commercial paper has original maturities between 90 and 270 days when purchased, but maturities as of June 30, 2019 are typically within 90 days and the investments are readily convertible to cash.

(c) In accordance with ASC Subtopic 820-10, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value

25 Carnegie Mellon University Notes to Consolidated Financial Statements June 30, 2019 and 2018

amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated statements of financial position. This includes commingled funds of $311.0 million, and hedge and private equity funds of $1,169.3 million as of June 30, 2019.

2018 Quoted Significant Prices in Other Significant Active Observable Unobservable Markets Inputs Inputs Total Fair (Level 1) (Level 2) (Level 3) Value Assets Deferred compensation plan assets $ 10,851 $ 5,364 $ 2,370 $ 18,585

Investments Cash equivalents (a) $ 44,203 $ 22,115 $ - $ 66,318 Other short term investments with maturity of less than 1 year (b) - 47,516 - 47,516 Equity investments U.S. - equity funds and common stocks (a) 394,081 - 5,878 399,959 Mutual funds - international developed 5,201 - - 5,201 Mutual funds - international emerging 156,246 - - 156,246 Short-term fixed income - 39,638 - 39,638 Fixed income funds & securities (a) 252,316 122 - 252,438 $ 852,047 $ 109,391 $ 5,878 $ 967,316 Investments measured under the NAV practical expedient (c) 1,418,090 Total investments $ 2,385,406

Beneficial interests held by third party $ - $ - $ 2,760 $ 2,760 Perpetual trusts held by third party - - 8,306 8,306 Total assets held in trust by others - - 11,066 11,066 Interest rate swap receivable - - - - Total assets at fair value $ 862,898 $ 114,755 $ 19,314 $ 2,415,057

Liabilities Interest rate swaps payable - 22,558 - 22,558 Total liabilities at fair value$ - $ 22,558 $ - $ 22,558

There were no significant transfers between Level 1 and Level 2 for the fiscal year ended 2018 (a) Presentation as a single class is appropriate based on the nature and risks of these investments.

(b) Other short term investments with maturity of less than 1 year include highly liquid commercial paper. This commercial paper has original maturities between 90 and 270 days when purchased, but maturities as of June 30, 2018 are typically within 90 days and the investments are readily convertible to cash.

26 Carnegie Mellon University Notes to Consolidated Financial Statements June 30, 2019 and 2018

(c) In accordance with ASC Subtopic 820-10, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated statements of financial position. This includes commingled funds of $343.4 million, and hedge and private equity funds of $1,074.7 million as of June 30, 2018.

Deferred compensation plan assets are valued using market quotations or prices obtained from independent pricing services (Level 1), market quotations or prices obtained from independent pricing sources who may employ various pricing methods (Level 2), and at contract value (Level 3).

Beneficial remainder and lead trusts held by third parties are valued at the present value of the future distributions expected to be received upon termination of the trust or over the term of the trust agreement and approximate fair value. Perpetual trusts are valued based upon the university’s percentage interest in the fair value of the underlying trust assets.

Interest rate swaps are valued using observable inputs, such as quotations received from the counterparty, dealers or brokers, whenever available and considered reliable. The valuation methods described above may produce fair value calculations that may not be indicative of net realizable value or reflective of future fair values.

The following table includes a roll forward of the consolidated statements of financial position amounts for financial instruments classified by the university within Level 3 of the fair value hierarchy (dollars in thousands):

Deferred Common Trusts Held Compensation Stock by Others Total Fair value, July 1, 2017$ 2,124 $ 5,290 $ 10,710 $ 18,124 Unrealized gains 68 588 356 1,012 Purchases 148 - - 148 Transfers in 30 - - 30 Transfers out - - - - Fair value, June 30, 2018$ 2,370 $ 5,878 $ 11,066 $ 19,314 Unrealized gains 76 121 182 379 Purchases 239 250 - 489 Transfers in - - - - Transfers out (225) - (546) (771) Fair value, June 30, 2019$ 2,460 $ 6,249 $ 10,702 $ 19,411

9. Leases On July 1, 2018, the university adopted Topic 842 by applying the guidance at adoption date. As a result, the comparative information as of June 30, 2018 has not

27 Carnegie Mellon University Notes to Consolidated Financial Statements June 30, 2019 and 2018

been adjusted. The university elected the package of practical expedients permitted under the transition guidance within Topic 842, which allowed the university to carry forward its identification of contracts that are or contain leases, its historical classification of existing leases and its accounting for initial direct costs for existing leases.

Beginning July 1, 2018, the University has recognized operating ROU assets and lease liabilities for the university’s leases on its consolidated statements of financial position. Upon adoption of Topic 842, the balances at adoption date of prepaid and accrued rent, lease incentives and unamortized assets and liabilities were reclassified and are now presented within operating lease ROU assets on the university’s Consolidated Statement of Financial Position.

Lease Arrangements The university has operating leases primarily for campus facilities, student housing and office space. Variable lease payments based on an index or rate, such as the consumer price index, are initially measured using the index or rate in effect at lease commencement. The university has elected the short-term lease exception under Topic 842 for all leases and as such, leases with an initial term of 12 months or less are not recorded on the Consolidated Statement of Financial Position. The University recognizes lease expense for short-term leases on a straight-line basis over the lease term.

The components of lease cost for the fiscal year ended June 30, 2019 included operating lease costs of $20.5 million and short-term lease costs of $4.9 million.

The following table displays the undiscounted cash flows due related to operating leases as of June 30, 2019, along with a reconciliation to the discounted amount recorded on the June 30, 2019, Consolidated Statement of Financial Position. Undiscounted cash flows due within the fiscal years ended June 30 were as follows (dollars in thousands):

2020 $ 19,000 2021 10,892 2022 8,757 2023 7,974 2024 7,680 Thereafter 23,470 Total undiscounted cash flows (weighted average term 9.2 years) $ 77,773 Impact of present value discount (weighted average discount rate 1.5%) (4,599) Amount reported on statements of financial position$ 73,174

Lease expense primarily related to facilities was $21.5 million (excluding international donated space of $10.3 million) for the year ended June 30, 2018. Future minimum operating lease payments at June 30, 2018 are as follows (dollars in thousands):

28 Carnegie Mellon University Notes to Consolidated Financial Statements June 30, 2019 and 2018

2019 $ 19,071 2020 19,290 2021 7,037 2022 3,641 2023 2,747 Thereafter 11,534 Total $ 63,320

10. Land, Buildings and Equipment Land, buildings and equipment at June 30, 2019 and 2018 consist of the following (dollars in thousands): Useful Lives 2019 2018 Buildings 35-50 years$ 1,429,412 $ 1,357,371 Moveable equipment 5-20 years 256,931 229,458 Utilities and building-related assets 20 years 98,913 87,852 Land improvements 15 years 19,540 13,841 Software costs 2-10 years 53,864 53,673 Leasehold improvements 2-20 years 31,864 19,885 Subtotal$ 1,890,524 $ 1,762,080 Accumulated depreciation (958,233) (893,776) Subtotal$ 932,291 $ 868,304 Land 54,637 49,691 Construction and equipment in progress 79,713 47,939 Land, buildings and equipment, net$ 1,066,641 $ 965,934

Carnegie Mellon acquired $5.9 million and $5.5 million in equipment through grants for the years ended June 30, 2019 and 2018, respectively.

29 Carnegie Mellon University Notes to Consolidated Financial Statements June 30, 2019 and 2018

11. Debt Obligations Debt obligations consist of the following as of June 30, 2019 and 2018 (dollars in thousands): Maturity Interest % 2019 2018

Allegheny County Higher Education Building Authority Revenue Bonds Fixed Rate Series 2012 A 03/01/24 2.5-5.0%$ 32,805 $ 32,805 Premium, net of debt issuance costs 2,610 3,169 Series 2013 03/01/43 4.0-5.0% 52,250 52,250 Premium, net of debt issuance costs 3,636 4,291

Series 2017 08/01/29 5.0% 62,165 62,165 Premium, net of debt issuance costs 12,590 13,971 Series 2019 A 08/01/27 5.0% 49,600 - Premium, net of debt issuance costs 9,973 - Variable Rate Series 2008 A 12/01/37 Variable 120,820 120,820 Debt issuance costs (307) (324)

Series 2012 B 02/01/33 Variable 50,000 50,000 Debt issuance costs (102) (109) Series 2019 B 02/01/42 Variable 60,140 - Debt issuance costs (138) - Pennsylvania Higher Education Facilities Authority, Fixed University Revenue Bonds, Series 2009 02/01/19 3.5-5.0% - 120,000 Premium, net of debt issuance costs - 1,407 Collaborative Innovation Center Tax Increment Financing 11/01/22 8.5% 1,380 1,695 Collaborative Innovation Center Mortgage Obligation 03/01/25 6.78% 13,396 14,150 Taxable Senior Notes 02/01/47 3.6% 70,000 70,000 Total debt obligations$ 540,818 $ 546,290

The university borrows its tax-exempt debt through public conduit issuers. As of June 30, 2019, all of Carnegie Mellon’s tax-exempt debt was issued by the Allegheny County Higher Education Building Authority (ACHEBA). The debt is a general unsecured obligation of the university. Although ACHEBA is the issuer, the university is responsible for the debt service of these bonds.

30 Carnegie Mellon University Notes to Consolidated Financial Statements June 30, 2019 and 2018

Series 2019 bonds were issued in January 2019 to redeem then outstanding Series 2009 bonds and are comprised of 1) $49.6 million Series 2019A bonds, bearing interest at a fixed rate of 5% and maturing on August 1, 2027. The 2019A bonds include an original issue premium of $10.7 million and; 2) $60.1 million 2019 B bonds, bearing interest at a variable rate indexed to one-month LIBOR, subject to a mandatory put on February 1, 2024, and maturing on February 1, 2042. The 2019 B bonds may be converted to another mode bearing interest at variable or fixed rates at the direction of the university.

The university maintains a taxable commercial paper program which allows the university to issue in aggregate up to $70.0 million in commercial paper notes. There were no commercial paper notes outstanding at June 30, 2019 or 2018.

The university has a $50.0 million unsecured line of credit agreement that expires October 19, 2020. The university did not draw on the line of credit during the years ended June 30, 2019 and 2018. No advances were outstanding at June 30, 2019. Advances accrue at a variable rate based on one-month LIBOR.

Interest Expense Cash paid for interest on financing obligations for the fiscal years ended June 30, 2019 and 2018 totaled $20.1 million and $18.5 million, respectively. The university utilizes interest rate swaps to synthetically adjust its exposure to variable rates. Including the swap expense, cash paid for interest for the fiscal years ended June 30, 2019 and 2018 was $23.5 million and $22.8 million, respectively. For the fiscal year ended June 30, 2019, interest expense of $1.1 million was capitalized related to construction in progress.

31 Carnegie Mellon University Notes to Consolidated Financial Statements June 30, 2019 and 2018

Aggregate Maturities Aggregate maturities of bonds and other debt instruments for each of the next five years ending June 30, excluding commercial paper, are as follows (dollars in thousands):

2020 $ 1,207 2021 11,303 2022 1,404 2023 1,359 2024 33,954 Thereafter 463,329 Total $ 512,556

Debt obligations are reflected in the table above based on stated final maturity dates. The outstanding Series 2008 A bonds are variable rate demand bonds which are subject to daily optional tender by the bondholders. In the event that a bondholder tenders these variable rate demand bonds, the purchase price will be repaid from the remarketing of the bonds to a new investor. However, in the event that none of the bonds could be remarketed, Carnegie Mellon has entered into a Standby Bond Purchase Agreement (SBPA) with a financial institution that will purchase the Series 2008 A Bonds at the amount of the bonds outstanding plus related interest. The bonds would then become bank bonds, payable to the liquidity provider per the terms of the agreement. This SBPA was renewed in December 2017 for a three year term ending January 12, 2021.

12. Net Assets Net Assets consists of gifts and other unexpended revenues and gains and are available for the following purposes as of June 30, 2019 (dollars in thousands): Without With Donor Restrictions Donor Restrictions Total Board-designated endowment funds$ 438,497 $ - $ 438,497 Reserves for working capital and plant- long-term 362,826 - 362,826 Donor-restricted endowment funds - 874,519 874,519 Unexpended endowment gains - 689,283 689,283 Capital and other designations 760,697 153,722 914,419 Pledges and assets held in trust by others - 95,805 95,805 Split interest agreements and other donor designations - 11,469 11,469 Term endowments - 7,213 7,213 Loan funds 2,470 1,767 4,237 Total Net Assets$ 1,564,490 $ 1,833,778 $ 3,398,268

32 Carnegie Mellon University Notes to Consolidated Financial Statements June 30, 2019 and 2018

Net Assets consists of gifts and other unexpended revenues and gains and are available for the following purposes as of June 30, 2018 (dollars in thousands):

Without With Donor Restrictions Donor Restrictions Total Board-designated endowment funds$ 439,652 $ - $ 439,652 Reserves for working capital and plant- long-term 333,276 - 333,276 Donor-restricted endowment funds - 816,013 816,013 Unexpended endowment gains 631,167 631,167 Capital and other designations 689,135 145,570 834,705 Pledges and assets held in trust by others - 115,959 115,959 Split interest agreements and other donor designations - 11,115 11,115 Term endowments - 4,860 4,860 Loan funds 2,470 1,553 4,023 Total Net Assets$ 1,464,533 $ 1,726,237 $ 3,190,770

13. Derivative Instruments and Hedging Activities Carnegie Mellon has entered into the following interest rate swap agreements to adjust the exposure to variable interest rates on long-term debt (dollars in thousands):

Interest Counterparty Swap Effective Notional Rate paid Interest Term Termination Cancellation Agreement Date Amount by CMU Received (in years) Date Option Sep 2004 Oct 2004$ 50,000 3.0% 67% of 1M LIBOR 15 Oct 2019 Oct 2014* Apr 2006 Dec 2006$ 100,000 3.4% 67% of 1M LIBOR 22 Dec 2028 Dec 2016 May 2007 Jun 2007$ 5,125 3.8% 67% of 1M LIBOR 20 Mar 2027 N/A May 2007 Mar 2012$ 40,325 3.8% 67% of 1M LIBOR 20 Mar 2032 N/A Feb 2012 Mar 2012$ 38,000 SIFMA 1.92% 12 Mar 2024 N/A

* Counterparty cancellation option is monthly after October 1, 2014.

33 Carnegie Mellon University Notes to Consolidated Financial Statements June 30, 2019 and 2018

The following fair values of the swap agreements were recorded as accounts payable and other liabilities and other assets in the consolidated statements of financial position for the years ended June 30, 2019 and 2018 (dollars in thousands):

Derivatives Reported as Assets/(Liabilities) Date of Swap Agreement 2019 2018 Sep 2004 $ (186) $ (831) Apr 2006 (18,713) (13,417) May 2007 (946) (739) May 2007 (9,634) (7,313) Feb 2012 1,293 (258) Total$ (28,186) $ (22,558)

The fair value of these agreements is estimated to be an amount that Carnegie Mellon would receive (receivable) or pay (liability) to voluntarily terminate the agreement. Based upon the university’s credit rating, the university is required to post collateral equal to the amount by which the liability value exceeds $30.0 million for each of its counterparties. No collateral was required as of June 30, 2019 and June 30, 2018.

The following interest expense and mark to market gains/(losses) were recorded as other sources under nonoperating activities in the consolidated statements of activities for the years ended June 30, 2019 and 2018 (dollars in thousands):

Interest Fair Value Total Date of Swap (Expense) (Loss) Gain (Loss) Gain Agreement 2019 2018 2019 2018 2019 2018 Interest rate swaps: Sep 2004$ (715) $ (998) $ 645 $ 1,347 $ (70) $ 349 Apr 2006 (1,833) (2,397) (5,296) 5,515$ (7,129) 3,118 May 2007 (113) (141) (207) 286$ (320) 145 May 2007 (885) (1,110) (2,321) 2,427$ (3,206) 1,317 Feb 2012 138 299 1,551 (988) 1,689 (689) Total$ (3,408) $ (4,347) $ (5,628) $ 8,587 $ (9,036) $ 4,240

34 Carnegie Mellon University Notes to Consolidated Financial Statements June 30, 2019 and 2018

Carnegie Mellon utilizes energy forward contracts, which are physically settled, to hedge against the future changes in the cost of electricity and natural gas. These contracts limit Carnegie Mellon’s exposure to higher rates; however, they could also limit the benefit of decreases in rates. These contracts qualify for normal purchases and sales exemptions and are not required to be recognized on the statements of financial position at fair value because Carnegie Mellon takes physical delivery of the electricity and natural gas and the gains and losses are already recognized in the cost.

14. Expenses by Functional Category Operating expenses by functional category for the year ended June 30, 2019 are as follows (dollars in thousands): Instruction & Dpt Sponsored Admin & Instl Academic Student Research Research Support Support Services Auxiliary Total Salaries $ 318,405 $ 180,773 $ 75,750 $ 79,070 $ 28,709 $ 3,206 $ 685,913 Benefits 65,910 27,017 25,576 21,042 7,754 757 148,056 Other Operating Expenses 17,236 149,680 45,540 55,277 20,227 41,045 329,005 Depreciation 26,380 17,718 4,994 8,963 7,663 7,021 72,739 Interest 4,812 3,232 911 1,635 1,398 2,849 14,837 Total$ 432,743 $ 378,420 $ 152,771 $ 165,987 $ 65,751 $ 54,878 $ 1,250,550

Operating expenses by functional category for the year ended June 30, 2018 are as follows (dollars in thousands):

Instruction & Sponsored Admin & Instl Academic Student Dpt Research Research Support Support Services Auxiliary Total Salaries $ 306,755 $ 167,826 $ 71,781 $ 76,756 $ 26,794 $ 3,231 $ 653,143 Benefits 64,586 26,646 25,042 20,509 7,346 754 144,883 Other Operating Expenses 11,070 139,803 52,584 49,206 19,480 39,065 311,208 Depreciation 23,950 17,685 4,324 7,787 7,208 6,406 67,360 Interest 4,175 3,083 754 1,357 1,256 2,745 13,370 Total$ 410,536 $ 355,043 $ 154,485 $ 155,615 $ 62,084 $ 52,201 $ 1,189,964

Natural expenses attributable to more than one functional expense category are allocated using a variety of cost allocations such as square footage, time, and effort.

35 Carnegie Mellon University Notes to Consolidated Financial Statements June 30, 2019 and 2018

Total fundraising expense of $34.0 million and $27.8 million ($31.4 million and $24.4 million in administration and institutional support) is included above for the years ended June 30, 2019 and 2018, respectively.

15. Commitments and Contingencies Carnegie Mellon is a defendant in a number of legal actions seeking damages and other relief. While the final outcome of each action cannot be determined at this time, management records a reserve in operating activities for those cases in which the loss is both probable and estimable. For the other legal actions that are not reserved, legal counsel and management are of the opinion that the liability, if any, will not have a material effect on Carnegie Mellon’s consolidated financial statements.

Carnegie Mellon receives significant financial assistance from the federal government, including the sponsorship of federal research projects. Research grants and contracts normally provide for the recovery of direct and indirect costs. Entitlement to the recovery of the applicable direct and related indirect costs is generally conditional upon compliance with the terms and conditions of the grant agreements and applicable federal regulations, including the expenditure of the resources for eligible purposes. Substantially all grants and Carnegie Mellon’s indirect cost rate are subject to financial and compliance reviews and audits by the grantors. In management’s opinion, the likelihood of an adverse material outcome upon its financial position from those reviews and audits is remote.

At June 30, 2019 and 2018 Carnegie Mellon had contractual obligations of approximately $39.6 million and $32.1 million, respectively, in connection with major construction projects.

16. Retirement Plans and Other Post-Employment Benefits Carnegie Mellon sponsors two defined contribution retirement plans for eligible faculty and staff, healthcare plans for retirees, and participates in a multi-employer pension fund for union staff. Retirement plan expense for the years ended June 30, 2019 and 2018 totaled $40.1 million and $38.3 million, respectively. Carnegie Mellon contributed $0.9 million and $0.8 million to the Central Pension Fund of the International Union of Operating Engineers, a multi-employer plan in fiscal years 2019 and 2018, respectively. See below for a discussion of the assets held in trust to fund post-retirement healthcare and other post-employment benefits.

Carnegie Mellon provides certain health care benefits for eligible retired employees. The liability for post-retirement benefit obligations is recorded in the consolidated statements of financial position in accounts payable and other liabilities. Cumulative amounts recognized within post-retirement benefit obligations and not yet recognized as components of net periodic benefit cost consist of the following at June 30 (dollars in thousands):

2019 2018 Net actuarial gain$ (14,015) $ (11,107) Total$ (14,015) $ (11,107)

36 Carnegie Mellon University Notes to Consolidated Financial Statements June 30, 2019 and 2018

Net periodic benefit costs recognized in the consolidated statements of activities totaled $1.6 million and $2.2 million for the years ended June 30, 2019 and 2018, respectively. Other gains in benefit obligations recognized in non-operating activities totaled $2.9 million and $4.8 million for the years ended June 30, 2019 and 2018, respectively.

During fiscal year 2020, amortization of $0.9 million actuarial gain is expected to be recognized as components of net periodic benefit cost. The discount rate used in determining the net periodic benefit cost was 4.2% and 3.9% for the years ended June 30, 2019 and 2018, respectively.

The reconciliation of the accumulated benefit obligation and funded status at June 30 is as follows (dollars in thousands): 2019 2018

Benefit obligation, beginning of year $ 22,190 $ 25,076 Service cost 1,211 1,409 Interest cost 976 1,026 Assumption changes and actuarial loss/(gain) (3,533) (5,080) Benefit payments (250) (241) Benefit obligation, end of year $ 20,594 $ 22,190 Fair value of plans' assets - - Funded status$ 20,594 $ 22,190

The assumed discount rate used for calculating the benefit obligation for the fiscal years ended June 30, 2019 and 2018 was 3.7% and 4.2%, respectively. An annual rate of increase in the per capita cost of covered health care benefits for the fiscal years ended June 30, 2019 and 2018 of 6.8% and 7.0%, respectively, was assumed. For the fiscal years ended June 30, 2019 and 2018, the rate was assumed to decrease gradually to 5.0% by 2026, and remain at 5.0% thereafter.

Expected benefits to be paid in future fiscal years are as follows (dollars in thousands): Total Expected Retiree Employer Benefit June 30 Contributions Payments Payments 2020$ 599 $ 314 $ 913 2021 896 458 1,354 2022 1,204 611 1,815 2023 1,511 750 2,261 2024 1,792 850 2,642 2025-2029 12,677 5,088 17,765

In conjunction with an agreement made with the federal government, Carnegie Mellon has established a separate trust, which is available to general creditors only in the event of insolvency. Assets in the trust to fund post-retirement health care and other post-employment benefits are $22.3 million and $21.9 million for June 30, 2019 and

37 Carnegie Mellon University Notes to Consolidated Financial Statements June 30, 2019 and 2018

2018, respectively. These assets are reflected as investments in the accompanying consolidated statements of financial position.

17. Related Party Transactions Sponsored projects revenue for fiscal years 2019 and 2018 includes $3.4 million and $3.3 million, respectively, received from MPC, a nonprofit related entity of Carnegie Mellon and the University of Pittsburgh. The revenue primarily represents federal funding from various contracts received by MPC, for which MPC has subcontracted to Carnegie Mellon for support of a supercomputer and related activities.

Carnegie Mellon is an owner as a tenant in common of the Bellefield Boiler Plant (“Bellefield”) for the purpose of sharing of the steam produced by the plant. Bellefield operates such that all of the operating costs of the plant are passed to the owners in the form of steam prices. Carnegie Mellon is obligated for a percent of liabilities based upon use of steam produced by Bellefield. As of June 30, 2019 and 2018, Carnegie Mellon’s percentage obligation was 15.2%. Included in other assets at June 30, 2019 and 2018 are $0.6 million and $0.5 million of advances, respectively, resulting primarily from operating surpluses. Included in occupancy and related expenses is $3.5 million and $3.6 million for steam costs paid to Bellefield for the years ended June 30, 2019 and 2018, respectively.

Carnegie Mellon is one of fifteen designated institutions of higher learning and other charitable organizations named as beneficiaries of The Dietrich Foundation (the “Foundation”) created by William S. Dietrich II pursuant to an Amended and Restated Declaration of Trust dated August 23, 2011. The Foundation came into existence as a Pennsylvania charitable trust on October 6, 2011 and was granted exemption from Federal income tax under section 501(c)(3) of the Internal Revenue Code, specifically as a Type I charitable supporting organization under section 509(a)(3). The Foundation’s primary mission is to provide ongoing and increasing financial support to a number of educational institutions, largely in the greater Pittsburgh area, including Carnegie Mellon. The Foundation is governed by a Board of nine (9) Trustees, of which two (2) are appointed by Carnegie Mellon.

The Foundation is expected to make annual distributions that will be allocated among the pre-specified supported organizations. As of June 30, 2019, Carnegie Mellon’s distribution share remained at 53.5%.

The distributions to Carnegie Mellon have been recorded as contribution revenue with donor restrictions as received and held in endowment net assets with donor restrictions designated as Dietrich Foundation Endowment Funds. The endowed funds will be managed in accordance with Carnegie Mellon’s generally applicable investment and disbursement policies in effect for its other permanently restricted endowments. Distributions made from the endowed funds will be used for the purposes authorized by the Foundation’s Trustees. Distributions of $14.3 million and $12.8 million were received in fiscal years 2019 and 2018, respectively.

18. Guarantees In the ordinary course of business, Carnegie Mellon engages in transactions with third parties involving the provision of goods and/or services. The contracts for these transactions may require Carnegie Mellon to indemnify the third party or others under

38 Carnegie Mellon University Notes to Consolidated Financial Statements June 30, 2019 and 2018

certain circumstances. The terms of indemnity vary from contract to contract. The amount of the liability associated with such indemnification obligations, if any, is not expected to be material.

Carnegie Mellon has contractually agreed to indemnify its trustees and officers, and in some cases its employees and agents, against certain liabilities incurred as a result of their service on behalf of or at the request of Carnegie Mellon and also advances, on behalf of those indemnified, the costs incurred by them in defending certain claims. Carnegie Mellon carries insurance that limits its exposure for this indemnification obligation. The amount of the liability associated with any known pending or threatened claims covered by this indemnification obligation, if any, is not expected to be material.

Carnegie Mellon has contractually agreed to indemnify specified parties in connection with bond offerings in which it has been involved. The indemnification obligation covers losses, claims, damages, liabilities and other expenses incurred by the underwriters as a result of any untrue statements or material omissions made by Carnegie Mellon in connection with the bond offerings. The amount of the liability associated with any known pending or threatened claims covered by this indemnification obligation, if any, is not expected to be material.

19. Subsequent Events The university has performed an evaluation of subsequent events through October 25, 2019, the date on which the consolidated financial statements were issued.

39

Schedule of Expenditures of Federal Awards

40 CARNEGIE MELLON UNIVERSITY

Schedule of Expenditures of Federal Awards

Year ended June 30, 2019

Pass-through Passed entity sponsor Federal through to Federal program CFDA No. Direct Pass-through Pass-through entity number expenditures subrecipient

Student Financial Assistance Cluster: U.S. Department of Education: Office Of Federal Student Aid: Federal Supplemental Educational Opportunity Grants (FSEOG) 84.007 $ 2,077,676 — $ 2,077,676 — Federal Work-Study Program (FWS) 84.033 1,051,709 — 1,051,709 — Federal Perkins Loan Program 84.038 16,256,461 — 16,256,461 — Federal Pell Grant Program (Pell) 84.063 4,661,199 — 4,661,199 — Federal Direct Student Loans (Direct Loan) 84.268 49,525,170 — 49,525,170 —

Total Student Financial Assistance Cluster $ 73,572,215 — $ 73,572,215 —

Research and Development Cluster: U.S. Department of Agriculture: National Institute Of Food and Agriculture: Specialty Crop Research Initiative 10.309 — 447,603 Cornell University 7640110607 447,603 — Agriculture and Food Research Initiative (AFRI) 10.310 58,490 — 58,490 — Regents Of the Univ Agriculture and Food Research Initiative (AFRI) 10.310 — 178,884 Of California A160316S0001 178,884 —

Total U.S. Department Of Agriculture $ 58,490 626,487 $ 684,977 —

U.S. Department of Commerce: National Oceanic and Atmospheric Administration (NOAA): Weather and Air Quality Research 11.459 49,534 — 49,534 — National Institute Of Standards and Technology (NIST): NIST – IPA:FY18 11.IP1707 144,458 — 144,458 — Measurement and Engineering Research Standards 11.609 1,378,180 — 1,378,180 — Arrangements for Interdisciplinary Research Infrastructure 11.619 — 594,338 Iowa State University 4261702A 594,338 27,432 Arrangements for Interdisciplinary Research Infrastructure 11.619 — 320,163 University Of Delaware 49409 320,163 — Science, Technology, Business and/or Education Outreach 11.620 8,459 — 8,459 —

Total U.S. Department Of Commerce $ 1,580,631 914,501 $ 2,495,132 27,432

Department of Defense: Department of the Navy: Unconstrained Resolution, Occlusion, Pose, and Aging-Tracking, Surveillance and Identification 12.N6833516C0177 6,710 — 6,710 — SharpFocus: Attaining Sub-Millimeter and Millisecond Resolution For Noninvasive Stimulation & Sensing 12.N6523619C8017 482,422 — 482,422 — Innovative Collaborative For Unmanned Aerial & Dissimilar Systems 12.RD — 162,690 Near Earth Autonomy A022646 162,690 — Detect and Avoid Certification Environment for Unmanned Air Vehicles 12.RD — 45,171 Near Earth Autonomy N6833517C038301 45,171 — Navy 2017 STTR Phase 1: Collaborative Mapping and Planning for Air and Ground Vehicles 12.RD — 43,586 Near Earth Autonomy N6833517C038301 43,586 — Office Of the Chief Of Naval Research: Basic and Applied Scientific Research 12.300 8,896,403 — 8,896,403 1,039,137 The Regents Of The University Basic and Applied Scientific Research 12.300 — 382,612 Of California 1015GTA244 382,612 — Basic and Applied Scientific Research 12.300 — 7,000 University Of Pittsburgh 00621564147121 7,000 — Basic and Applied Scientific Research 12.300 — 145,595 University Of Maryland 43350Z8665001 145,595 — Johns Hopkins University Applied Basic and Applied Scientific Research 12.300 — 87,201 Physics Laboratory 146615 87,201 — South Dakota School Of Mines Basic and Applied Scientific Research 12.300 — 16,220 and Technology SDSMTCMU1905 16,220 — Basic and Applied Scientific Research 12.300 — 4,314 Pennsylvania State University 5459CMUONR2543 4,314 — Basic and Applied Scientific Research 12.300 — 10,118 Purdue University 410477068 10,118 — University Of Arkansas Basic and Applied Scientific Research 12.300 — 158,006 at Little Rock 25323818CMU 158,006 — Advanced Research Projects Agency: — Research and Technology Development 12.910 1,318,767 — 1,318,767

Total Department Of the Navy $ 10,704,302 1,062,513 $ 11,766,815 1,039,137

Department of the Army: U.S. Army War College Fellows W/Institute for Politics and Strategy: 12.FP000000184 15,177 — 15,177 — Army War College Fellowships FY2018-2021 12.FP000000085 37,020 — 37,020 — Unmanned and Autonomous Systems Test (UAST) Science and Technology (S&T) – Robustness Inside-Out Testing (RIOT): Automated White-Box Stress Testing Of UAS Software 12.W900KK16C0006 1,985,049 — 1,985,049 715,545 Metaphor Extraction via Targeted Analysis Of Language 12.W11NF12C0020 (2,134) — (2,134) (2,134) Generation Of Bioengineered Posterior Cornea Construct For Use In Evaluating Mechanisms Of Ocular Vesicant Injury 12.W81XWH16C0141 46,909 — 46,909 — Autonomous Delivery Of Trauma Care In The Field 12.W81XWH19C0083 18,941 — 18,941 — Sovereign Challenge U.S. Special Operations Command Carnegie Mellon University Cmu Support 12.H240019P0010 14,344 — 14,344 — Hybrid Visual and Inertial Based Training Kit for Hand-Held Detector Training 12.W911QX17C0017 499,050 — 499,050 — Subcontract Agreement For Work On ADL Project 12.RD — (1,755) Carnegie Learning 1990426 (1,755) — Robotics Technology Addendum To Extended Reach, Cbrn And Isr Operations With Autonomous Air And Ground Vehicles 12.RD — 1,208,903 Consortium, Inc. 69201002T09 1,208,903 — Project Maven: Synthetic Data Generation for Augmenting the Training Of Computer Vision Algorithms 12.RD — 598,896 General Dynamics PO4022806440277130 598,896 — Complex Atomistic Potentials Through Machine Learning 12.RD — 259,128 Engility Corporation 14463PETTTCMUCCMKY09002 259,128 — Insanity Program Phase II Base Period 12.RD — 132,287 Parabon Nanolabs Inc 201711CARNEGIE051SBIRII001 132,287 — 6.2 Towards Natural Dialogue with Robots in a Collaborative Exploration Task 12.RD — 23,729 University Of Southern California 63890568 23,729 —

Visualization Interface for Senior Team Aggregation 12.RD — 88,722 Perceptronics Solutions Inc. 1990514 88,722 — Proposal for Improvement and Support Of Position Sensor Developed for the U.S. Army’s Next-Generation Handheld Initiative 12.RD — 43,477 Fibertek, Inc. PO818030 43,477 — High-Expressivity World Modeling 12.RD — 155,400 SRI International PO20680 155,400 — US Army Medical Command: Military Medical Research and Development 12.420 269,717 269,717 172,105

41 (Continued) CARNEGIE MELLON UNIVERSITY

Schedule of Expenditures of Federal Awards

Year ended June 30, 2019

Pass-through Passed entity sponsor Federal through to Federal program CFDA No. Direct Pass-through Pass-through entity number expenditures subrecipient Military Medical Research and Development 12.420 $ — 3,717 Boston University 4500002827 $ 3,717 — Rehabilitation Institute Military Medical Research and Development 12.420 — 27,315 Of Chicago 1042317/1047218 27,315 — US Army Materiel Command: Basic Scientific Research – RECOVERY 12.431 6,153,380 6,153,380 656,310 Basic Scientific Research – RECOVERY 12.431 — 274,513 General Dynamics PO4022806440229096 274,513 — Basic Scientific Research – RECOVERY 12.431 — 1,159,104 General Dynamics PO4022806440277130 1,159,104 29,302 Basic Scientific Research – RECOVERY 12.431 — 172,655 Duke University 3130860 172,655 — Basic Scientific Research – RECOVERY 12.431 — 56,122 Princeton University SUB0000251 56,122 — Basic Scientific Research – RECOVERY 12.431 — 45,623 Regents Of Univ Of California KK1652 45,623 — Basic Scientific Research – RECOVERY 12.431 — 388,826 University Of Southern California 92688877 388,826 — Basic Scientific Research – RECOVERY 12.431 — 22,493 Washington State University 131087G003806 22,493 — University Of Illinois At Basic Scientific Research – RECOVERY 12.431 — 10,147 Urbana-Champaign 09243017089 10,147 — Office Of the Secretary Of Defense: Basic, Applied, and Advanced Research in Science and Engineering 12.630 — 53,116 BBNT Solutions 6015102960008POLBN9510141 53,116 — Basic, Applied, and Advanced Research in Science and Engineering 12.630 — 47,396 DCS Corporation APX02N005PO161468 47,396 — Basic, Applied, and Advanced Research in Science and Engineering 12.630 — 230,820 Penn State University 4938CMUARMY0045 230,820 — Basic, Applied, and Advanced Research in Science and Engineering 12.630 47,434 — 47,434 — Basic, Applied, and Advanced Research in Science and Engineering (Advanced Robotics for Manufacturing Institute – ARM) 12.630 8,298,138 — 8,298,138 3,646,025 Research and Technology Development 12.910 753,367 — 753,367 156,618 Research and Technology Development 12.910 — 75,752 University Of Pittsburgh 00584714139331 75,752 —

Total Department Of the Army $ 18,136,392 5,076,386 $ 23,212,778 5,373,771

Department of the Air Force: SEI 2015 Contract 12.FA870115D0002 140,274,442 — 140,274,442 8,228,841 IPA-018 Rhoades 12.IPA-018 183,424 — 183,424 — IPA-019 Boleng 12.IPA-019 303,384 — 303,384 — IPA-020 Cunningham 12.IPA-020 178,033 — 178,033 — Resilient Synchronized Planning And Assessment For The Contested Environment (RSPACE) 12.RD — 113,940 Systems & Technology Research , LLC 20151075 113,940 — Calculating And Understanding Resource Bounds To Detect Space/Time Vulnerabilities 12.RD — (595) University Of Dayton Research Institute RSC15029 (595) — Expressive TTS for Machine Translation 12.RD — 151,512 University Of Southern California 88509027 151,512 — Design, Reconfigure, And Evaluate Autonomous Models In Training (Dreamit) 12.RD — 26,659 Tier 1 Performance Solutions , LLC AFM3064 26,659 — Hy-Circa: Autonomous Synthesis And Verification Of Hybrid Cyber-Physical System Controllers 12.RD — 21,582 Smart Information Flow Technologies A017506 21,582 — Cognitive Decentralized Classification Onboard 12.RD — 18,514 BAE Systems 1018286 18,514 — The Causal Modeling for Knowledge Transfer, Exploration, and Temporal Simulation 12.RD — 131,095 BAE Systems 975028 131,095 — Virginia Polytechnic Institute Homo SocioNeticus: Scaling The Cognitive Foundations Of Online Social Behavior 12.RD — 426,694 & State University 45052219374 426,694 — Office of the Chief of Naval Research: — — Basic and Applied Scientific Research 12.300 3,338,406 — 3,338,406 560,319 Basic and Applied Scientific Research 12.300 — 67,175 University of Texas at Austin UTA17000907 67,175 — Basic and Applied Scientific Research 12.300 — 18,315 University of Virginia GG13332155259 18,315 — US Army Materiel Command Basic, Applied, and Advanced Research in Science and Engineering 12.630 175,226 — 175,226 — Material Command: Air Force Defense Research Science Program 12.800 5,659,957 — 5,659,957 729,795 National Center for Defense Air Force Defense Research Science Program 12.800 — 52,491 Manufacturing and Machining PO20170089PROJ4058000 52,491 50,276 Air Force Defense Research Science Program 12.800 — 137,059 Syracuse University 2871704936S01 137,059 — Air Force Defense Research Science Program 12.800 — 8,771 University of Michigan SUBK00009636PO3005325604 8,771 — Air Force Defense Research Science Program 12.800 — 38,956 University of Washington UWSC108118PO35507 38,956 — Air Force Defense Research Science Program 12.800 — 48,703 University of Washington POBP027412-WASHINGTON-XIAO 48,703 — Air Force Defense Research Science Program 12.800 — 150,641 California Institute of Technology 681098507 150,641 — Air Force Defense Research Science Program 12.800 — 242,231 California Institute of Technology S421546 242,231 — Air Force Defense Research Science Program 12.800 — 2,075 University Of Pittsburgh 00617584144221 2,075 — Air Force Defense Research Science Program 12.800 — 63,645 University Of Texas At El Paso 226030260A 63,645 — Advanced Research Project Agency Research and Technology Development 12.910 1,574,485 — 1,574,485 155,474

Total Department of the Air Force $ 151,687,357 1,719,463 $ 153,406,820 9,724,705

Defense Advanced Research Project Agency (DARPA) ARIEL: Analysis Of Rare Incident-Event Languages 12.HR001115C0114 2,053,254 — 2,053,254 136,509 Resonant Micromechanical Receiver 12.HR001115C0137 405,515 — 405,515 — Methodology For Correct-By-Construction Cells For Logic, Sram And Analog Design 12.HR001116C0038 99,009 — 99,009 — Agile Dimorphic Execution 12.HR001117C0051 1,049,596 — 1,049,596 — Robots Servicing Robots: Study and Technology Demonstrating 12.HR001119C0094 1,835 — 1,835 — Phase-Change Ratcheting Actuators For High Work Density (PRAWN) 12HR001119C0037 32,877 — 32,877 —

Assured Autonomy: CPS Behavior Modeling & Control 12.RD — 143,635 HRL Laboratories LLC 17090181689USPOLINE2 143,635 — Assured Autonomy: Dynamic Assurance 12.RD — 98,485 HRL Laboratories LLC 17090181689USPOLINE6 98,485 — Assured Autonomy: Efficient Runtime Monitoring 12.RD — 41,583 HRL Laboratories LLC 17090181689USPOLINE4 41,583 — Assured Autonomy: Hybrid Systems Toolkit 12.RD — 41,604 HRL Laboratories LLC 17090181689USPOLINE3 41,604 — Assured Autonomy: Learning Safety Constraints 12.RD — 140,806 HRL Laboratories LLC 17090181689USPOLINE5 140,806 — Assured Autonomy: Le-CPS Modeling & Verification 12.RD — 211,553 HRL Laboratories LLC 17090181689USPOLINE1 211,553 — Chess Architecture For Active Social Engineering Defense 12.RD — 51,680 HRL Laboratories LLC 17093183592US 51,680 — Crew Augmentation For Fast And Semi-Autonomous Driving 12.RD — (39,577) Department of the Interior D16PC00030 (39,577) — Curb: Calculating And Understanding Resource Bounds To Detect Space/Time Vulnerabilities 12.RD — 253,780 Gramma Tech Inc. GTS1507 253,780 — Common Ground Learning and Explanation 12.RD — 294,442 Palo Alto Research Center 313533 294,442 — D3M Program 12.RD — 81,813 SRI International 21485 81,813 —

42 (Continued) CARNEGIE MELLON UNIVERSITY

Schedule of Expenditures of Federal Awards

Year ended June 30, 2019

Pass-through Passed entity sponsor Federal through to Federal program CFDA No. Direct Pass-through Pass-through entity number expenditures subrecipient ELICIT: A System For Extracting And Organizing Causal Information 12.RD $ — 90,092 University Of Southern California 93146501 $ 90,092 — Active Illumination And Imaging Across Millisecond To Picosend Time Scales For General LOS/NLOSScene Understanding 12.RD — 323,294 University Of Wisconsin-Madison 832K112 323,294 — Fundamental Research On The Transistors And Interconnects For THZ Transistors SBIR (Phase 2) 12.RD — 161,709 Carley Technologies Inc 1990527 161,709 — Network Back-Haul Layers Architecture 12.RD — 70,693 BAE Systems 970997 70,693 — Obtaining Multipath & Non-Line-Of-Sight Information By Sensing Coherence & Intensity With Emerging Novel Techniques 12.RD — 57,038 Southern Methodist University G0015347520 57,038 — Radio Frequency Machine Learning Systems 12.RD — 45,784 BAE Systems 1006839 45,784 — Reconfigurable Wheel/Track For All-Terrain Mobility 12.RD — 794 US Army Contracting Command W56HZV16C0026 794 — Resilient Synchronized Planning And Assessment For The Contested Environment (Rspace) – Phase 3 12.RD — 423,322 Systems & Technology Research LLC 20180054 423,322 — University Of Illinois At Resonance Enhanced Authenticating Communications And Charging (REACH) 12.RD — 114,346 Urbana-Champaign 2014069160207618715412 114,346 — The Physics of Artificial Intelligence 12.RD — 63,880 Aimdyn Inc 1042845 63,880 — Using Knowledge Of Diffusion Processes To Constrain Learning From Biomedical Image Data 12.RD — 23,533 Stanford University 61985626138364 23,533 — Office of the Chief of Naval Research: Basic and Applied Scientific Research 12.300 — 780,927 AFRL- Rome, NY FA87501520281 780,927 46,803 Basic and Applied Scientific Research 12.300 — 1,948,088 AFRL- Rome, NY FA87501620042 1,948,088 158,369 Basic and Applied Scientific Research 12.300 — 636,026 AFRL- Rome, NY FA87501620033 636,026 145,959 Basic and Applied Scientific Research 12.300 — 403,763 AFRL- Rome, NY FA87501720130 403,763 — Basic and Applied Scientific Research 12.300 — 1,226,787 AFRL- Rome, NY FA87501520277 1,226,787 — National Rural Electric Cooperative Basic and Applied Scientific Research 12.300 — 164,079 Association CMU001SUB2016 164,079 — Basic Scientific Research 12.431 — 195,185 US Army Contracting Command W911NF1710104 195,185 154,838 Scientific Research – Combating Weapons of Mass Destruction 12.351 25,214 — 25,214 — Advanced Research Projects Agency: Research and Technology Development 12.910 2,385,814 — 2,385,814 285,275 Research and Technology Development 12.910 — 210,707 Arizona State University ASUB00000086 210,707 — Research and Technology Development 12.910 — 12,964 BAE Systems 1025530 12,964 — The Regents Of The University Research and Technology Development 12.910 — 18,482 Of California 00009973 18,482 — Research and Technology Development 12.910 — 7,687 University Of California – San Francisco 11331SC 7,687 — Research and Technology Development 12.910 — (54) University of California 00008162PO#BB00144164 (54) — Research and Technology Development 12.910 — 363,229 Vanderbilt University UNIV58700 363,229 — Research and Technology Development 12.910 — 6,948,687 Semiconductor Research Corp 2018JU2779 6,948,687 3,955,852 Research and Technology Development 12.910 — 550,513 Department of the Interior D16AP00143 550,513 — Research and Technology Development 12.910 — 494,210 SPAWAR Sys. Cen. San Diego N660011724064 494,210 152,413

Total DARPA $ 6,053,114 16,655,569 $ 22,708,683 5,036,018

U.S. Marine Corps: Defense Threat Reduction Agency: Improved Nowcasting Via Adaptive Boosting of Highly Variable Biosurveillance Data Sources 12.HDTRA118C0008 499,411 — 499,411 — Office of the Secretary of Defense: Scientific Research – Combating Weapons of Mass Destruction 12.351 1,039,418 — 1,039,418 181,508

Total U.S. Marine Corps $ 1,538,829 — $ 1,538,829 181,508

Department of Defense – Other: National Security Agency: CMU Science of Security Lablet: Composability and Usability 12.H9823014C0140 (730) — (730) (1,006) CMU Science of Security Lablet: Taking on the Hard Problems 12.H9823018D0008 723,953 — 723,953 111,208 Interagency Personnel Agreement (IPA) 12.PO0860400 67,439 — 67,439 — 3Dmems For Small-Scale Robotics And Mechatronics 12.RD — 113,467 University of Maryland 70937Q1778101 113,467 — High Performance Exoskeleton 12.RD — 104,461 Apptronik Systems Inc CMU001 104,461 — Office of the Chief of Naval Research: Basic and Applied Scientific Research 12.300 77,044 — 77,044 — Office of the Secretary of Defense: Basic, Applied, and Advanced Research in Science and Engineering 12.630 67,614 — 67,614 — National Security Agency: Mathematical Sciences Grants Program 12.901 (1,746) — (1,746) — Information Security Grants 12.902 374,502 — 374,502 — U.S. Army Medical Command: Military Medical Research and Development 12.420 — 48,122 University of Pittsburgh 00427534097731 48,122 —

Office of Economic Adjustment: Economic Adjustment Assistance for State Governments 12.617 — 15,922 University of Utah 10044742CMU000095690 15,922 —

Total Department of Defense – Other 1,308,076 281,972 1,590,048 110,202

Total – Department of Defense $ 189,428,070 24,795,903 $ 214,223,973 21,465,341

Intelligence Advanced Research Projects Activity (IARPA): Sparse Heterogeneous Representations and Domain Adaptive Matching for Unconstrained Facial Recognition 12.RD — 54,625 University of Maryland 53169Z9062205 54,625 — A Comprehensive Approach To Modeling Job Performance Via Unobtrusive, Continuous Multimodal Sensing 12.RD — (5,827) University Of Notre Dame 2017170428007 (5,827) — Trusted CMOS System-On-Chip Design with Self-Healing Piezoelectric Mems 12.RD — (1,365) SPAWAR Sys. Cen. San Diego N6600112C2008 (1,365) — Eyes in the Sky 12.RD — 233,569 General Electric Corporation 401099716 233,569 — A View-Invariant Internal World Representation for Predictive Cognitive Human Activity Understanding 12.RD — 2,626,211 Department of the Interior D17PC00340 2,626,211 — Deep Intermodel Video Analytics (DIVA) 12.RD — 1,052,633 University of Maryland 54548Z9108201 1,052,633 — Deep Intermodel Video Analytics (DIVA) 12.RD — 242,621 University of Maryland 72858Z9321201 242,621 —

Total IARPA $ — 4,202,467 $ 4,202,467 —

U.S Department of Education: National Institute on Disability and Rehabilitation Research 84.133 — 68,973 University of Pittsburgh 00424531269201 68,973 — Institute of Education Sciences:

43 (Continued) CARNEGIE MELLON UNIVERSITY

Schedule of Expenditures of Federal Awards

Year ended June 30, 2019

Pass-through Passed entity sponsor Federal through to Federal program CFDA No. Direct Pass-through Pass-through entity number expenditures subrecipient Education Research, Development and Dissemination 84.305 $ 1,848,443 — $ 1,848,443 — Education Research, Development and Dissemination 84.305 — 37,115 University of Pittsburgh 00453540705711 37,115 — Education Research, Development and Dissemination 84.305 — 23,423 University of Maryland 28473Z2099001 23,423 — Education Research, Development and Dissemination 84.305 — 217,140 Middle Tennessee State University 53720777773 217,140 — Education Research, Development and Dissemination 84.305 — 107,466 Wested S00015106 107,466 — Education Research, Development and Dissemination 84.305 — 6,370 Temple University 259746CMU 6,370 —

Total U.S. Department of Education $ 1,848,443 460,487 $ 2,308,930 —

U.S. Department of Energy: Novel Polymer Electrolyte For Solid State Lithium Metal Battery Technology 81.RD 31,033 — 31,033 — The Center For electron Microscopy And Materials Characterization Facility 81.DEFE0029464 7,380 — 7,380 — Magneto-Optical Kerr Effect Microscopy 81.DEACO494AL85000 889 — 889 — Scoping a Water for Energy Decision Support Framework 81.RD — 12,625 Sandia National Laboratories PO1988472 12,625 — Raven Test Articles in 16NM and 10NM CMOS 81.RD — 651,005 Sandia National Laboratories PO1903629 651,005 — Modeling And Optimization Of Existing Plants 81.RD — 21,282 Keylogic PO5000016006 21,282 — Power Plant Water Use Modeling 81.RD — 163,889 Keylogic PO5000016003 163,889 — Ideas Model Activity Of The Mesa Contract 81.RD — 5,320 Keylogic PO5000016005 5,320 — IECM Maintenance 81.RD — 134,741 Keylogic PO5000016002 134,741 — Real-Time Decision-Making For The Subsurface Workshop 81.RD — 7,849 Keylogic PO5000016004 7,849 — Sensors And Controls 81.RD — 6,598 Leidos Inc TASK2PO10220961 6,598 — Advanced Reactor Manufacturing 81.RD — 18,876 Leidos Inc TASK1PO10220962 18,876 — Electrode Structural Evaluation 81.RD — 37,833 Leidos Inc TASK3PO10220961 37,833 — High Performance Computing Of Electrode Subvolume Performances 81.RD — 40,532 Leidos Inc TASK4PO10220961 40,532 — Robust Extreme-Scale Multimodal Structured Learning from Spatio-Temporal Data 81.RD — 403,049 Brookhaven National Laboratory 322174 403,049 — Quantum Machine Learning 81.RD — 33,600 Brookhaven National Laboratory 349445 33,600 — Honeywell Federal Manufacturing Distortion Analyses For Additive Manufacturing 81.RD — 12,556 & Technologies LLC N000296944 12,556 — National Renewable Energy Mechanism Of Photochemical N2 Reduction 81.RD — 129,962 Laboratory (NREL) XDJ88218501 129,962 — Versatile Data Management Services For Future DOE Science 81.RD — 81,772 Los Alamos National Laboratory 520262 81,772 — LANL Institute For Reliable High Performance Information Technology 81.RD — 308,176 Los Alamos National Laboratory 394903 308,176 — Advanced Optimization Strategies for Bubbling Fluidized Bed Processes in Pyomo 81.RD — 87,461 Lawrence Berkeley National Laboratory 7208191 87,461 — Carbon Capture Simulation Initiative (CSSI) 81.RD — 897,221 Lawrence Berkeley National Laboratory 7208191 897,221 — Study of Machine Learning (ML) Component of the Enhanced Radiological Nuclear Inspection and Evaluation System (ERNIE) 81.RD — 33 Lawrence Livermore National Laboratory B631980 33 — Expert Review Of Nexant National Interruption Cost Survey Roadmap 81.RD — 54,622 Lawrence Berkeley National Laboratory 7436048 54,622 — Lighten Up 81.RD — 852 Lawrence Berkeley National Laboratory 7284586 852 — High Performance Computing 81.RD — (1,423) URS Corporation T23640003621054004272000004 (1,423) — Study of the Machine Learning (ML) Component of the Enhanced Radiological Nuclear Inspection and Evaluation System (ERNIE) 81.RD — 29,731 Lawrence Livermore National Laboratory B622469 29,731 — Study of the Machine Learning (ML) Component of the Enhanced Radiological Nuclear Inspection and Evaluation System (ERNIE) 81.RD — 59,959 Lawrence Livermore National Laboratory B622976 59,959 — Sensors And Controls: Microwave Doppler Solids Circulation Sensors 81.RD — 15,113 AECOM Energy & Construction Inc. T24240003684051004411000004 15,113 — Sensors Development for Chemical Looping 81.RD — (8,934) AECOM Energy & Construction Inc. T23840003684051003411000004 (8,934) — High Performance Computing 81.RD — 103,852 AECOM Energy & Construction Inc. T24540003621054006243000004 103,852 — Smart Mobility Data Collection and Analysis 81.RD — 12,790 Argonne National Laboratory 7F30155 12,790 — National Renewable Energy Microgrid Project Survey Research and Technical Advisory to Developers in Africa 81.RD — 58,493 Laboratory (NREL) XAT77029101 58,493 — Electrode Structural Evaluation 81.RD — 86,151 AECOM Energy & Construction Inc. T24440003621054006241000004 86,151 — SLAC National Accelerator DESC Analysis Coordinator 81.RD — 54,080 Laboratory – Stanford 178958 54,080 — Porous Nanocrystal Composites Assembled from Colloidosomes 81.RD — 35,657 Lawrence Livermore National Laboratory B626472 35,657 — Explainable And Small Data machine Learning For Accelerating Feedstock Optimization 81.RD — 45,972 Lawrence Livermore National Laboratory B632272 45,972 — FFTX: A Co-Design Project For Fast Fourier Transforms 81.RD — 285,193 Lawrence Berkeley National Laboratory 7421006 285,193 — Optimization of Electrode Microstructure Through Performance Simulation 81.RD — 30,177 AECOM Energy & Construction Inc. T24340003621054006225000004 30,177 —

Advanced Reactor Manufacturing 81.RD — 30,908 AECOM Energy & Construction Inc. T24140002673070001231000004 30,908 — Innovation Incubator (IN2) Channel Partner Strategic Award Agreement – Center For 81.RD National Renewable Energy Cleantech Entrepreneurial Excellence (C2E2) — 29,972 Laboratory (NREL) A021150 29,972 7,044 Computational Modeling of Multi-Stage Osmotically Assisted Reverse Osmosis (OARO) Process 81.RD — 4,304 AECOM Energy & Construction Inc. T23940002670080002221000004 4,304 — Computational Modeling of Multi-Stage Osmotically Assisted Reverse Osmosis (OARO) Process 81.RD — 16,665 AECOM Energy & Construction Inc. T24640002670080003422000004 16,665 — Office of Science Financial Assistance Program 81.049 3,043,233 — 3,043,233 Office of Science Financial Assistance Program 81.049 (1,222) Krell Institute 1042361 (1,222) — Office of Science Financial Assistance Program 81.049 — 129 Krell Institute A020794 129 — Office of Science Financial Assistance Program 81.049 — 85,618 Brown University 00001295 85,618 — Office of Science Financial Assistance Program 81.049 — 165,784 University of Pittsburgh 00019794014243 165,784 — Office of Science Financial Assistance Program 81.049 — (4,542) University of Wisconsin – Milwaukee 133405518144AAA5437 (4,542) — Office of Science Financial Assistance Program 81.049 — 84,719 Columbia University 2GG014496 84,719 — Office of Science Financial Assistance Program 81.049 — 137,972 University of Washington UWSC10119BPO27412 137,972 — Office of Science Financial Assistance Program 81.049 — 54,161 Cornell University 8598911163 54,161 — Office of Science Financial Assistance Program 81.049 — 4,520 Pennsylvania State University 5923CMUDOE9200 4,520 — Office of Science Financial Assistance Program 81.049 — 47,521 University Of Minnesota A007230202 47,521 — University Coal Research 81.057 108,266 — 108,266 63,992 Conservation Research and Development 81.086 523,118 — 523,118 118,450 Conservation Research and Development 81.086 — 307,067 Massachusetts Institute of Technology 5710004217 307,067 — Conservation Research and Development 81.086 — 107,125 University Of Minnesota A006948101 107,125 — 81.087 1,493,379 — 1,493,379 276,734 Renewable Energy Research and Development 81.087 — 48,598 Eaton Corporation 4135798679 48,598 — Renewable Energy Research and Development 81.087 — 165,709 General Motors LLC PO4300438642 165,709 — Renewable Energy Research and Development 81.087 — 17,079 University Of Kansas FY2019077 17,079 — Renewable Energy Research and Development 81.087 — 12,125 William Marsh Rice University R1A122 12,125 — 81.089 7,334 — 7,334 —

44 (Continued) CARNEGIE MELLON UNIVERSITY

Schedule of Expenditures of Federal Awards

Year ended June 30, 2019

Pass-through Passed entity sponsor Federal through to Federal program CFDA No. Direct Pass-through Pass-through entity number expenditures subrecipient Fossil Energy Research and Development 81.089 $ — 94,640 Liquid Ion Solutions LLC DEFE0031629SCMU01 $ 94,640 — Environmental Remediation and Waste Processing and Disposal 81.104 1,121,401 — 1,121,401 52,550 Stewardship Science Grant Program 81.112 182,609 — 182,609 — Energy Efficiency and Renewable Energy Information Dissemination, Outreach, Training and Technical Analysis/Assistance 81.117 54,963 — 54,963 — Nuclear Energy Research, Development and Demonstration 81.121 606,698 — 606,698 41,079 Electricity Delivery and Energy Reliability, Research, Development and Analysis 81.122 — 220,909 University of Arkansas SA1611103 220,909 — Advanced Research Projects Agency – Energy 81.135 46,691 — 46,691 — National Rural Electric Cooperative Advanced Research Projects Agency – Energy 81.135 — 110,355 Association DEAR0000705 110,355 — Advanced Research Projects Agency – Energy 81.135 — 181,211 24M Technologies Inc. AR3550714 181,211 — Advanced Research Projects Agency – Energy 81.135 — 1,285 Texas A&M University 06S160621 1,285 — Advanced Research Projects Agency – Energy 81.135 — 121,685 Clemson University 18302192020937 121,685 — Advanced Research Projects Agency – Energy 81.135 — 508,906 General Motors LLC 4300660784 508,906 — Advanced Research Projects Agency – Energy 81.135 — 72,526 University Of Colorado 15547071001135449 72,526 — Advanced Research Projects Agency – Energy 81.135 — 44,189 Ionic Materials Inc. AR3550714 44,189 —

Total U.S. Department of Energy $ 7,226,994 6,586,583 $ 13,813,577 559,849

Environmental Protection Agency: Office of Research and Development (ORD): Science to Achieve Results (STAR) Research Program 66.509 2,005,576 — 2,005,576 783,084 Science to Achieve Results (STAR) Research Program 66.509 — 56,477 Arizona State University 14494 56,477 — P3 Award: National Student Design Competition for Sustainability 66.516 4,225 — 4,225 —

Total Environmental Protection Agency $ 2,009,801 56,477 $ 2,066,278 783,084

U.S. Department of Health and Human Services: National Institutes of Health: National Institute for Occupational Safety & Health 93.16IPA1616820 23,022 — 23,022 — Centers for Disease Control and Prevention: National Implementation of Medicare Advantage And Prescription Drug Plan 93.RD — 100,810 Rand Corporation 9920180038 100,810 — Inhibition Of Telomere Maintenance By Oxidized DNA Precursor 93.RD — 22,112 University of Pittsburgh 00592111302871 22,112 — Illuminating Metabolic Pathways Enabled By Early T Cell Activation 93.RD — 18,113 University of Pittsburgh CNVA000572411312881 18,113 — Neuronal Population Dynamics Within And Across Cortical Areas 93.RD — 74,612 University of Pittsburgh 00620611320461 74,612 — Cardiovascular Bioengineering Training Program 93.RD — 42,092 University of Pittsburgh 00555531315981 42,092 — High Performance Computing for Multiscale of Biological Systems 93.RD — 6,703 University of Pittsburgh 90140951300131 6,703 — National Institutes of Health: Food and Drug Administration Research 93.103 262,538 — 262,538 69,612 Environmental Health 93.113 — 62,721 University of Pittsburgh 0058991129881 62,721 — Oral Diseases and Disorder Research 93.121 187,386 — 187,386 — Oral Diseases and Disorder Research 93.121 — 68,796 University of Michigan 3003557307 68,796 — Los Angeles Biomedical Oral Diseases and Disorder Research 93.121 — 206,203 Research Institute 30842CMUPO17007341 206,203 — Oral Diseases and Disorder Research 93.121 — 8,446 University of Pittsburgh 00564261299961 8,446 — Human Genome Research 93.172 268,494 — 268,494 — Human Genome Research 93.172 — 131,958 University of Pittsburgh 00409761306991 131,958 — Human Genome Research 93.172 — 69,376 University of Pittsburgh 90111251307111 69,376 —

Human Genome Research 93.172 — 26,573 University of California – San Diego 84210799S9001587 26,573 — Research Related to Deafness and Communication Disorders 93.173 469,540 469,540 117,399 Research Related to Deafness and Communication Disorders 93.173 — 59,867 University of Pittsburgh 00494841313131 59,867 — Research Related to Deafness and Communication Disorders 93.173 — 388 Vanderbilt University Medical Center VUMC70291 388 — Research and Training in Complementary and Integrative Health 93.213 553,080 — 553,080 209,389 Research on Healthcare Costs, Quality & Outcomes 93.226 113,842 — 113,842 — Research on Healthcare Costs, Quality & Outcomes 93.226 — 89,688 University of Pittsburgh 00427711253641 89,688 — Mental Health Research Grants 93.242 3,452,491 — 3,452,491 423,717 Mental Health Research Grants 93.242 — 226,472 University of Pittsburgh 00526871294091 226,472 — Mental Health Research Grants 93.242 — 191,874 University of Pittsburgh 00593501306731 191,874 — Icahn School Of Medicine Mental Health Research Grants 93.242 — 4,671 At Mount Sinai 025553244609 4,671 — Mental Health Research Grants 93.242 — 100,266 University of Pittsburgh 00467061264652 100,266 — Mental Health Research Grants 93.242 — 143,790 University of Pittsburgh 00594601312001 143,790 — Mental Health Research Grants 93.242 — 121,318 University of Pittsburgh 90103751306151 121,318 — Mental Health Research Grants 93.242 — 76,507 McClean Hospital 401454 76,507 — Mental Health Research Grants 93.242 — 23,726 University of Pittsburgh 00564871300521 23,726 — Mental Health Research Grants 93.242 — 71,865 University of Pittsburgh 00608961310251 71,865 — Mental Health Research Grants 93.242 — 347,578 University of Pittsburgh CNVA000562681301381 347,578 — Mental Health Research Grants 93.242 — 13,047 Nurelm Inc 20181031CMU 13,047 — Mental Health Research Grants 93.242 — 72,988 University Of Oregon 281450C 72,988 — Mental Health Research Grants 93.242 — (40,477) University of Pittsburgh ‘003277712295411272251 (40,477) — Alcohol Research Programs 93.273 381,395 — 381,395 36,181 Drug Abuse and Addiction Research Programs 93.279 889,589 — 889,589 57,393 Drug Abuse and Addiction Research Programs 93.279 — 17,414 University of Pittsburgh 90108321296451 17,414 — Drug Abuse and Addiction Research Programs 93.279 — 250,550 University of Pittsburgh 90108321316611 250,550 — Drug Abuse and Addiction Research Programs 93.279 — 73,862 University of Pittsburgh 00550391292901 73,862 — Discovery and Applied Research for Technological Innovations to Improve Human Health 93.286 1,701,720 — 1,701,720 432,509 Discovery and Applied Research for Technological Innovations to Improve Human Health 93.286 — 180,164 Rutgers University 0398PO786818 180,164 — Discovery and Applied Research for Technological Innovations to Improve Human Health 93.286 — 7,544 University of Pittsburgh 00495171303461 7,544 — Discovery and Applied Research for Technological Innovations to Improve Human Health 93.286 — 83,022 University of Pittsburgh CNVA000495171320011 83,022 — Teenage Pregnancy Prevention Program 93.297 877,788 — 877,788 270,705 Trans-NIH Research Support 93.310 826,874 — 826,874 214,105

45 (Continued) CARNEGIE MELLON UNIVERSITY

Schedule of Expenditures of Federal Awards

Year ended June 30, 2019

Pass-through Passed entity sponsor Federal through to Federal program CFDA No. Direct Pass-through Pass-through entity number expenditures subrecipient $ St. Jude Children’s Research $ Trans-NIH Research Support 93.310 — 64,866 Hospital Inc 112510107842878 64,866 — Trans-NIH Research Support 93.310 — 8,870 University of Pittsburgh 00465321268641 8,870 — Trans-NIH Research Support 93.310 — 43,639 University of Toledo F2017122 43,639 — Trans-NIH Research Support 93.310 — 441,101 University Of Pittsburgh 00620811319662 441,101 — Trans-NIH Research Support 93.310 — 14,540 University of Toledo F201826 14,540 — Research Infrastructure Programs 93.351 600,360 — 600,360 59,513 Nursing Research 93.361 245,013 — 245,013 34,647 Nursing Research 93.361 — 219,104 University Of Pittsburgh 00500741288681 219,104 — Cancer Cause and Prevention Research 93.393 — 24,848 Rand Corporation 9920160024 24,848 — Cancer Cause and Prevention Research 93.393 — 34,532 University Of Pittsburgh 00586451308081 34,532 — Cancer Biology Research 93.396 120,520 — 120,520 — Cancer Biology Research 93.396 — 29,101 University Of Wisconsin-Madison 656K972 29,101 — Cancer Research Manpower 93.398 78,777 — 78,777 — ACL National Institute on Disability, Independent Living, and Rehabilitation Research 93.433 1,956,916 — 1,956,916 985,360 ACL National Institute on Disability, Independent Living, and Rehabilitation Research 93.433 — 351,453 University Of Pittsburgh 00424531305641 351,453 — Social Services Research and Demonstration 93.647 205 — 205 — Cardiovascular Diseases Research 93.837 373,190 — 373,190 50,467 Cardiovascular Diseases Research 93.837 — 92,883 Cornell University 8454511081 92,883 — Cardiovascular Diseases Research 93.837 — 88,730 Boston University 4500001943 88,730 — Cardiovascular Diseases Research 93.837 — 70,301 University Of Minnesota A005584701 70,301 — Cardiovascular Diseases Research 93.837 — 34,967 Yale University GK000128CON80000443 34,967 — Cardiovascular Diseases Research 93.837 — 31,868 University of Pittsburgh 90154671319771 31,868 — Lung Diseases Research 93.838 344,424 — 344,424 98,076 Lung Diseases Research 93.838 — (533) Oregon Health and Science University 1008628CMU (533) — Lung Diseases Research 93.838 — 50,197 Oregon Health and Science University 1011201CARNEGIE 50,197 — Lung Diseases Research 93.838 — 48,410 University Of Alabama 000503442001 48,410 — Lung Diseases Research 93.838 — 36,481 University Of Pittsburgh 00605791318021 36,481 — Lung Diseases Research 93.838 — 27,612 Vanderbilt University VUMC67476 27,612 — Blood Diseases and Resources Research 93.839 156,615 — 156,615 11,726 Blood Diseases and Resources Research 93.839 — 90,293 Cornell University 8452811105 90,293 — Blood Diseases and Resources Research 93.839 — 186,676 University Of Minnesota N005714802 186,676 — Arthritis, Musculoskeletal and Skin Diseases Research 93.846 199,697 — 199,697 — Diabetes, Digestive, and Kidney Diseases Extramural Research 93.847 786,133 — 786,133 129,802 Diabetes, Digestive, and Kidney Diseases Extramural Research 93.847 — 26,322 University Of Pittsburgh 00542171292471 26,322 — Diabetes, Digestive, and Kidney Diseases Extramural Research 93.847 — 526,367 University Of Utah 10034882 526,367 69,203 Extramural Research Programs in the Neurosciences and Neurological Disorders 93.853 1,961,869 — 1,961,869 306,550 Extramural Research Programs in the Neurosciences and Neurological Disorders 93.853 — 169,818 University Of Pittsburgh 00524111296502 169,818 — Extramural Research Programs in the Neurosciences and Neurological Disorders 93.853 — 56,103 Duquesne University G1800006 56,103 —

Extramural Research Programs in the Neurosciences and Neurological Disorders 93.853 — 149,043 Columbia University 1GG01355101 149,043 — Extramural Research Programs in the Neurosciences and Neurological Disorders 93.853 — 5,912 University Of Pittsburgh 00620031318711 5,912 — Extramural Research Programs in the Neurosciences and Neurological Disorders 93.853 — 18,364 University Of Pittsburgh 0062076132211 18,364 — Extramural Research Programs in the Neurosciences and Neurological Disorders 93.853 — 112,590 University Of Pittsburgh CNVA000434271250191 112,590 — Allergy and Infectious Diseases Research 93.855 460,557 — 460,557 — Los Angeles Biomedical Allergy and Infectious Diseases Research 93.855 — (2,904) Research Institute 30636CMU (2,904) — Los Angeles Biomedical Allergy and Infectious Diseases Research 93.855 — 104,733 Research Institute 3063CMUPO19001317 104,733 — Allergy and Infectious Diseases Research 93.855 — 135,082 University Of Pittsburgh 00527491286821 135,082 — Magee Womens Research Allergy and Infectious Diseases Research 93.855 — (2,418) Institute & Foundation 4681 (2,418) — Magee Womens Research Allergy and Infectious Diseases Research 93.855 — 275,903 Institute & Foundation 4685CMU 275,903 — Allergy and Infectious Diseases Research 93.855 — 50,749 University Of Pittsburgh 00559511299041 50,749 — Allergy and Infectious Diseases Research 93.855 — 38,524 University Of Pittsburgh 90116541261111 38,524 — Allergy and Infectious Diseases Research 93.855 — 20,317 University Of Pittsburgh 00439821261071 20,317 — Allergy and Infectious Diseases Research 93.855 — 3,377 University of Pittsburgh 00627021325141 3,377 — Biomedical Research and Research Training 93.859 4,245,958 — 4,245,958 487,778 Biomedical Research and Research Training 93.859 — 151,653 North Carolina State University 2017314201 151,653 — Biomedical Research and Research Training 93.859 — 64,493 Tru Code Gene Repair 2R44GM10818703 64,493 — Biomedical Research and Research Training 93.859 — 87,591 University Of Pittsburgh CNA000540571311631 87,591 — Biomedical Research and Research Training 93.859 — 28,438 University Of Texas at Austin UTA16001042 28,438 — Biomedical Research and Research Training 93.859 — (606) University Of Pittsburgh 00402421294661 (606) — Biomedical Research and Research Training 93.859 — 53,525 University Of Pittsburgh 90140901300081 53,525 — Biomedical Research and Research Training 93.859 — 1,000 University Of Pittsburgh 00312264096511 1,000 — Biomedical Research and Research Training 93.859 — 10,030 University Of Pittsburgh 00396681249661 10,030 — Biomedical Research and Research Training 93.859 — 74,904 University Of Pittsburgh 00448711261901 74,904 — Biomedical Research and Research Training 93.859 — 60,559 University Of Pittsburgh 00402421310181 60,559 — Biomedical Research and Research Training 93.859 — 48,730 University Of Pittsburgh 00462101312901 48,730 — Biomedical Research and Research Training 93.859 — 178,256 University Of Pittsburgh 00485891273942 178,256 — Biomedical Research and Research Training 93.859 — 177,930 University Of Pittsburgh 00509461313811 177,930 — Biomedical Research and Research Training 93.859 — 15,718 University Of Pittsburgh 90140921300101 15,718 — Biomedical Research and Research Training 93.859 — 13,061 University Of Pittsburgh 90140941300121 13,061 — Biomedical Research and Research Training 93.859 — 2,586 University Of Pittsburgh 90140931300111 2,586 — Biomedical Research and Research Training 93.859 — 28,490 University Of Pittsburgh 00540571300071 28,490 — Biomedical Research and Research Training 93.859 — 26,161 University Of Pittsburgh 00595151315531 26,161 — Biomedical Research and Research Training 93.859 — 8,375 University Of Pittsburgh 00509461298531 8,375 — Biomedical Research and Research Training 93.859 — (3,004) University Of Pittsburgh 00462101298141 (3,004) —

46 (Continued) CARNEGIE MELLON UNIVERSITY

Schedule of Expenditures of Federal Awards

Year ended June 30, 2019

Pass-through Passed entity sponsor Federal through to Federal program CFDA No. Direct Pass-through Pass-through entity number expenditures subrecipient Biomedical Research and Research Training 93.859 $ — 490,305 University Of Pittsburgh 00386641306891 $ 490,305 — Biomedical Research and Research Training 93.859 — 204,236 University Of Pittsburgh 90140901311641 204,236 — Biomedical Research and Research Training 93.859 — 5,585 University Of Pittsburgh 90140911300091 5,585 — Biomedical Research and Research Training 93.859 — 103,002 University Of Pittsburgh 90140921311661 103,002 — Biomedical Research and Research Training 93.859 — 52,496 University Of Pittsburgh 90140941311681 52,496 — Biomedical Research and Research Training 93.859 — 36,485 University Of Pittsburgh 90140951311691 36,485 — Biomedical Research and Research Training 93.859 — (27,912) PNA Innovations 2R44GM10818703 (27,912) — Child Health and Human Development Extramural Research 93.865 1,441,314 — 1,441,314 292,569 Child Health and Human Development Extramural Research 93.865 — 8,403 California Institute Of Technology 18B1096944 8,403 — Child Health and Human Development Extramural Research 93.865 — 96,224 Johns Hopkins University 2002772820 96,224 — Child Health and Human Development Extramural Research 93.865 — 189,004 University Of Pittsburgh CNVA00546311295081 189,004 — Child Health and Human Development Extramural Research 93.865 — 8,629 Duke University 2036730 8,629 — Aging Research 93.866 — 57,657 University Of Pittsburgh 00521861286171 57,657 — Aging Research 93.866 — 557 University Of Pennsylvania 571756PO3942100 557 — Aging Research 93.866 — 20,209 University Of Pennsylvania 574701PO4126492 20,209 — Aging Research 93.866 — 20,838 University Of Pennsylvania 54701PO4292066 20,838 — Vision Research 93.867 944,627 — 944,627 170,656 Vision Research 93.867 — 85,207 University Of Pittsburgh 00502371276741 85,207 — Vision Research 93.867 — 12,751 University Of Pittsburgh 00434571255701 12,751 — Vision Research 93.867 — 15,646 University Of Nevada Reno UNR1671PO117GC000002 15,646 — Vision Research 93.867 — 27,776 University Of Pittsburgh 00590781317971 27,776 — Medical Library Assistance 93.879 — 16,853 University Of Pittsburgh 00418441258771 16,853 — Medical Library Assistance 93.879 — 145,134 University Of Pittsburgh CNVA00442281261211 145,134 —

Total U.S. Health and Human Services $ 23,923,934 9,229,435 $ 33,153,369 4,527,357

National Aeronautics and Space Administration: Wheel Terrain-Traverse Energy Usage Investigation Via Laboratory Experimentation Using Single Wheel Soil Dynamometer And Prototype Wheels 43.RD — 95,758 Jet Propulsion Lab 1612701 95,758 — Cosmology With the First High Latitude Survey 43.RD — 24,263 Jet Propulsion Lab NNN12AA01C 24,263 — Response Intelligent Systems Research and Development Support 43.RD — 750,641 Stinger Ghaffarian Technologies SC1400055 750,641 — Wheel Development For Mars Surface Mobility 43.RD — 56,457 Jet Propulsion Lab 1516288 56,457 — Automated Mapping And Planning To Improve For Assessment Of Coral Reerf Health 43.RD — 8,490 Jet Propulsion Lab 1617044 8,490 — Objective Uncertainty Quantification For Satellite-Based Atmospheric Sounding 43.RD — 21,260 Jet Propulsion Lab 1629749 21,260 —

Autonomous Contingency Detection and Reaction for Unmanned Aircraft Phase II 43.RD — 25,262 Near Earth Autonomy NNX17CS56C01 25,262 — Improved Navigation in Complex Terrains 43.RD — 7,083 Jet Propulsion Lab 1593953 7,083 — Interpreting HST Observations With Simulations Of Reionization: The Ionizing Photon Budget And The Decline Of Luman-Alpha Emission In Z6 Dropouts 43.RD — 12,450 Space Telescope Science Institute HSTAR15013002A 12,450 — Wfirst Infrared Nearby Galaxy Survey 43.RD — 3,262 3,262 — Science 43.001 382,926 — 382,926 — Science 43.001 — 86,568 SETI Institute SC3130 86,568 — Science 43.001 — 99,463 Planetary Science Institute 1523CARNEGIEMELLON 99,463 — Aeronautics 43.002 60,406 — 60,406 25,294 San Jose State University Aeronautics 43.002 — 115,008 Research Foundation 2116145736CMU 115,008 — Education 43.008 — 118,060 National Institute Of Aerospace C162B00CMU2 118,060 — Education 43.008 — 12,747 Penn State University 5246CMUNASAK06H 12,747 — Education 43.008 — 5,085 National Institute Of Aerospace CHECK27877CHECK28336 5,085 — Cross Agency Support 43.009 83,062 — 83,062 — Space Technology 43.012 830,180 — 830,180 —

Total National Aeronautics and Space Administration $ 1,356,574 1,441,857 $ 2,798,431 25,294

National Science Foundation: Interagency Personnel Act – Keisler 47.SES1650803 263,497 — 263,497 — Interagency Personnel Act – Wactlar 47.ITR1736797 177,024 — 177,024 — Interagency Personnel Act – Simmons 47.IIS1633963 28,691 — 28,691 — Engineering Grants 47.041 7,066,706 — 7,066,706 368,847 Engineering Grants 47.041 — (646) University Of Washington 763075 (646) — Engineering Grants 47.041 — 100,757 University Of California 00009171POBB00746962 100,757 — The Research Foundation For The Engineering Grants 47.041 — 75,735 State University Of New York 8239421149047 75,735 — Mathematical and Physical Sciences 47.049 7,042,364 — 7,042,364 136,209 Mathematical and Physical Sciences 47.049 — 46,125 University Of North Carolina 5111216 46,125 — Geosciences 47.050 758,234 — 758,234 138,600 Geosciences 47.050 (5,522) University Of Pittsburgh 00361150115291 (5,522) — Computer and Information Science and Engineering 47.070 27,624,823 27,624,823 711,334 The Regents Of the University Computer and Information Science and Engineering 47.070 — 120,202 Of California PO145GVA403 120,202 — The Research Foundation For The Computer and Information Science and Engineering 47.070 — (1,816) State University Of New York 1446 (1,816) — Computer and Information Science and Engineering 47.070 — (1,466) University Of California SA489610808PG (1,466) — Computer and Information Science and Engineering 47.070 — 5,466 State University Of New York at Buffalo R1045972 5,466 — Computer and Information Science and Engineering 47.070 — 313,626 Indiana University BL4812511CMUPO1801557 313,626 — Computer and Information Science and Engineering 47.070 — 174,941 Indiana University BL4812537CMUPO2233422 174,941 — Computer and Information Science and Engineering 47.070 — 7,651 Cornell University 7295410594 7,651 — Computer and Information Science and Engineering 47.070 — 26,022 Northeastern University 50265378050 26,022 — Computer and Information Science and Engineering 47.070 — 11,066 University Of California – Davis 20160153701 11,066 — University Of Illinois at Computer and Information Science and Engineering 47.070 — 36,479 Urbana-Champaign 2015071870115733 36,479 —

47 (Continued) CARNEGIE MELLON UNIVERSITY

Schedule of Expenditures of Federal Awards

Year ended June 30, 2019

Pass-through Passed entity sponsor Federal through to Federal program CFDA No. Direct Pass-through Pass-through entity number expenditures subrecipient Computer and Information Science and Engineering 47.070 $ — 3,356,055 MPC 17011 $ 3,356,055 — Computer and Information Science and Engineering 47.070 — (100) University Of Southern California 57373251PO10289409 (100) — Computer and Information Science and Engineering 47.070 — (115) University Of Southern California 65744642 (115) — Computer and Information Science and Engineering 47.070 — 22,982 Louisiana State University PO0000024529 22,982 — Computer and Information Science and Engineering 47.070 — 40,380 University Of Pittsburgh 00522330118651 40,380 — Computer and Information Science and Engineering 47.070 — 21,496 Texas A&M University 02S170209M1700268 21,496 — University Of Illinois at Computer and Information Science and Engineering 47.070 — 27,913 Urbana-Champaign 08662216839 27,913 — University Of Illinois at Computer and Information Science and Engineering 47.070 — 62,858 Urbana-Champaign 08822516863 62,858 — Computer and Information Science and Engineering 47.070 — 31,260 Washington University WU18422PO2933937G 31,260 — Biological Sciences 47.074 1,198,850 — 1,198,850 25,987 Biological Sciences 47.074 — 422,406 Duke University 14NSF1051 422,406 — Biological Sciences 47.074 — 6,900 Wake Forest University 19001 6,900 — Social, Behavioral, and Economic Sciences 47.075 3,812,347 — 3,812,347 525,041 Virginia Polytechnic Institute Social, Behavioral, and Economic Sciences 47.075 — 37,846 & State University 47945419374 37,846 — Social, Behavioral, and Economic Sciences 47.075 — 22,644 Boston University 4500001958 22,644 — Social, Behavioral, and Economic Sciences 47.075 — 44,259 Vanderbilt University UNIV58535 44,259 — Social, Behavioral, and Economic Sciences 47.075 — 35,680 City University Of New York CM0000122300 35,680 — Social, Behavioral, and Economic Sciences 47.075 — 29,438 New York University F039202 29,438 — Social, Behavioral, and Economic Sciences 47.075 — 82,478 University Of Texas At Austin UTA18000475 82,478 — Education and Human Resources 47.076 4,249,941 — 4,249,941 85,952 Office Of International Science and Engineering 47.079 — 141,927 University Of Pittsburgh 00554450120582 141,927 —

Total National Science Foundation $ 52,222,477 5,294,927 $ 57,517,404 1,991,970

48 (Continued) CARNEGIE MELLON UNIVERSITY

Schedule of Expenditures of Federal Awards

Year ended June 30, 2019

Pass-through Passed entity sponsor Federal through to Federal program CFDA No. Direct Pass-through Pass-through entity number expenditures subrecipient

U.S. Department Of Transportation: Federal Highway Administration (FHWA): Connecting Pedestrians With Disabilities to Adaptive Signal Control for Safe Intersection Crossing and Enhanced Mobility 20.DTFH6117C00014 $ 894,161 — $ 894,161 401,473 Pedestrian And Cyclists Detection For Transit Buses Phase II 20.RD — 16,322 Novateur Research Solutions LLC CMUSUBKDOT16FT1PII 16,322 — Highway Training and Education 20.215 10,898 — 10,898 — Office Of the Secretary (OST) Administration Secretariat: University Transportation Centers Program 20.701 3,280,602 — 3,280,602 781,290

Total US Department Of Transportation 4,185,661 16,322 4,201,983 1,182,763

Department Of Homeland Security: Algorithms for Automatic Detection Of Weapons and Other Objects in 3D CT Images and Videos 97.RD — 358,056 IDSS Holdings Inc. CMUB0020 358,056 — Centers for Homeland Security 97.061 — 389,009 George Mason University E2042931 389,009 — Homeland Security Research, Development, Testing, Evaluation and Demonstration Of Technologies Related to Nuclear Threat Detection 97.077 556,781 — 556,781 —

Total Department Of Homeland Security 556,781 747,065 1,303,846 —

Other Federal Agencies: US Department Of the Interior: Research and Technology Development 12.910 825,258 — 825,258 156,110 U.S. Geological Survey: Intergovernmental Personnel Act 15.A021447 33,786 — 33,786 — Earthquake Hazards program Assistance 15.807 59,015 — 59,015 — U.S. Geological Survey – Research and Data Collection 15.808 77,529 — 77,529 — U.S. Department Of State: Intergovernmental Personnel Act 19.1080417 201,221 — 201,221 — Professional and Cultural Exchange Programs – Citizen Exchanges 19.415 — 4,663 Institute Of International Education Inc. SIIIE1SUBR2017 4,663 — U.S. Department Of Justice: National Institute Of Justice: National Institute Of Justice Research, Evaluation, and Development Project Grants 16.560 (16,458) — (16,458) — Criminal Justice Research and Development: Graduate Research Fellowship 16.562 2,577 — 2,577 — National Endowment for the Arts: Promotion Of the Humanities – Office Of Digital Humanities 45.169 208,265 — 208,265 79,619 Promotion Of the Humanities – Office Of Digital Humanities 45.169 — 44,122 Duke University 3430722 44,122 —

Total Other Federal Agencies 1,391,193 48,785 1,439,978 235,729

Total Research and Development Cluster 285,789,049 54,421,296 340,210,345 30,798,819

Total Federal Award Expenditures $ 359,361,264 54,421,296 $ 413,782,560 30,798,819

See accompanying notes to schedule of expenditures of federal awards.

—

49 Carnegie Mellon University Notes to Schedule of Expenditures of Federal Awards June 30, 2019

1. Basis of Presentation The accompanying Schedule of Expenditures of Federal Awards (the Schedule) includes the federal contracts and grants expenditures of Carnegie Mellon University (Carnegie Mellon or the university) for the year ended June 30, 2019 and is presented on the accrual basis of accounting. The information in the Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative requirements, cost principles, and audit requirements for Federal Awards (Uniform Guidance). Therefore, some amounts presented in the Schedule may differ from amounts presented in, or used in, the preparation of the consolidated financial statements. Negative amounts represent adjustments in the normal course of business to amounts reported in a prior year.

For purposes of the Schedule, federal awards include all grants, contracts, and similar agreements entered into directly between the University and agencies and departments of the federal government and all subawards to the University by nonfederal organizations.

2. Summary of Significant Accounting Policies for Federal Award Expenditures Expenditures for federal student financial aid programs are recognized as incurred except for Perkins, as loans described in Note 5. For purposes of major program determination, these costs include Federal Pell Grant program grants to students, the federal share of students’ Federal Supplemental Educational Opportunity Grants (FSEOG) program grants and the federal share of Federal work Study (FWS) program earnings, Federal direct Student Loan disbursements, and administrative cost allowances, where applicable. Expenditures for federal awards are determined using the cost principles set forth in the Uniform Guidance (2 CFR, Part 220). Under these costs principles, certain types of expenditures are not allowable or are limited to reimbursement. Direct costs are recognized as incurred using the accrual method of accounting.

3. Catalog of Federal Domestic Assistance Numbers

Catalog of Federal Domestic Assistance (CFDA) Numbers and pass-through numbers are presented for those programs for which such numbers are available. In instances where no CFDA Number is available, the federal agency and the federal award number is included as well as the grantor or pass-through agency.

4. SEI Contracts

Amounts included in the Research and Development Cluster, Air Force section of the Schedule, reflect one contract award to the university, including funding received from other federal agencies related to and included with the Software Engineering Institute (SEI) Department of the Air Force contract (CFDA 12.FA870115D0002) through project work plans (PWP) as required by their Air Force sponsoring agreement.

The SEI is a federally funded research and development center (FFRDC) sponsored by the U.S. Department of Defense (DoD) and operated by the university. When federal agencies other than the primary sponsor contribute funds directly to the SEI’s basic effort, the work is administered using PWP.

50 Carnegie Mellon University Notes to Schedule of Expenditures of Federal Awards June 30, 2019

5. Federal Student Loan Programs

The Federal Perkins Loan Program (CFDA No. 84.038) is administered directly by the university and the balances and transactions are included in the University’s consolidated financial statements. The amount of Federal Perkins loans outstanding at June 30, 2019 totaled $12,897,822. Loans outstanding at the beginning of the year are included in the federal expenditures presented in the Schedule. Under federal law, the authority for schools to make new Perkins Loans ended on September 30, 2017, and final disbursements were permitted through June 30, 2018. As a result, students can no longer receive Perkins Loans.

Carnegie Mellon participates in the Federal Direct Loan Program (CFDA No. 84.268) which includes subsidized and unsubsidized student loans, Direct Parent Loan for Undergraduate Student (PLUS) Loans, and direct GRAD PLUS Loans. Loan disbursements under the Federal Direct Loan Program for the year ended June 30, 2019 totaled $49,525,170. These loans are not made by the University but are made to the students directly by the Federal government.

6. Facilities and Administrative Costs

For research and development awards, the University applies its fixed approved facilities and administrative rate when charging indirect costs to federal awards rather than the 10% de minimis cost rate as described in Section 200.414 of the Uniform Guidance. The fixed rates for capped and uncapped expenses for the year ended June 30, 2019 are as follows:

Capped Uncapped On-campus 51.10 % 51.30 % Off-campus 26.00 31.10 West Coast 55.50 N/A Software Engineering Institute 9.60 N/A National Robotics Engineering Center 27.10 22.20

The capped rate applies to all Department of Defense (DoD) contracts and subcontracts awarded or issued before November 30, 1993, all Non-DoD instruments, and all DoD grants.

The uncapped rate applies to all DoD contracts awarded or issued on or after November 30, 1993 in accordance with and under the authority of DFARS 231.303(l).

51 KPMG LLP BNY Mellon Center Suite 3400 500 Grant Street Pittsburgh, PA 15219-2598

Independent Auditors’ Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards

The Board of Trustees Carnegie Mellon University:

We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the consolidated financial statements of Carnegie Mellon University and its subsidiaries (the University), which comprise the consolidated statement of financial position as of June 30, 2019, the related consolidated statements of activities and cash flows for the year then ended, and the related notes to the consolidated financial statements, and have issued our report thereon dated October 25, 2019, which included an emphasis of matters paragraph indicating the University adopted, in 2019, Accounting Standards Update (ASU) No. 2016-14, Not-for-Profit Entities (Topic 958): Presentation of Financial Statements for Not-for-Profit Entities; ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), as amended; ASU No. 2018-08, Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made; and ASU No. 2016-02, Leases (Topic 842), as amended.

Internal Control Over Financial Reporting In planning and performing our audit of the consolidated financial statements, we considered the University’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the consolidated financial statements, but not for the purpose of expressing an opinion on the effectiveness of the University’s internal control. Accordingly, we do not express an opinion on the effectiveness of the University’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

Compliance and Other Matters As part of obtaining reasonable assurance about whether the University’s consolidated financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of

KPMG LLP is a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the University’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the University’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Pittsburgh, Pennsylvania October 25, 2019 KPMG LLP BNY Mellon Center Suite 3400 500 Grant Street Pittsburgh, PA 15219-2598

Independent Auditors’ Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance; and Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance

The Board of Trustees Carnegie Mellon University:

Report on Compliance for Each Major Federal Program We have audited Carnegie Mellon University and its subsidiaries’ (the University’s) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on the University’s major federal program for the year ended June 30, 2019. The University’s major federal program is identified in the summary of auditors’ results section of the accompanying schedule of findings and questioned costs.

Management’s Responsibility Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs.

Auditors’ Responsibility Our responsibility is to express an opinion on compliance for the University's major federal program based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the University’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion on compliance for the University’s major federal program. However, our audit does not provide a legal determination of the University’s compliance.

Opinion on Major Federal Program In our opinion, the University complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on its major federal program for the year ended June 30, 2019.

Report on Internal Control Over Compliance Management of the University is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the University’s internal control over compliance with the types of requirements that could have a direct and material effect on its major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for its major

KPMG LLP is a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the University’s internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.

Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance We have audited the consolidated financial statements of the University as of and for the year ended June 30, 2019, and have issued our report thereon dated October 25, 2019, which contained an unmodified opinion on those consolidated financial statements. Our audit was conducted for the purpose of forming an opinion on the consolidated financial statements as a whole. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by the Uniform Guidance and is not a required part of the consolidated financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the consolidated financial statements. The information has been subjected to the auditing procedures applied in the audit of the consolidated financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the consolidated financial statements or to the consolidated financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal awards is fairly stated, in all material respects, in relation to the consolidated financial statements as a whole.

Pittsburgh, Pennsylvania October 25, 2019 Carnegie Mellon University Schedule of Findings and Questioned Costs Year Ended June 30, 2019

1. Summary of Auditors’ Results

a. Type of report issued on whether the consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles: Unmodified

b. Internal control deficiencies over financial reporting disclosed by the audit of the financial statements:

 Material weaknesses: No  Significant deficiencies: None reported

c. Noncompliance material to the financial statements: No

d. Internal control deficiencies over major programs disclosed by the audit:

 Material weaknesses: No  Significant deficiencies: None reported

e. Type of report issued on compliance for major program: Unmodified

f. Audit findings that are required to be reported in accordance with 2 CFR 200.516(a): None

g. Major program:

 Research and Development Cluster – various CFDA numbers

h. Dollar threshold used to distinguish between Type A and Type B programs: $3,000,000

i. Auditee qualified as a low-risk auditee: Yes

2. Findings Relating to the Consolidated Financial Statements Reported in Accordance with Government Auditing Standards

None

3. Findings and Questioned Costs Relating to Federal Awards

None

56